David Stevens, who departed as the Federal Housing Administration commissioner back in the spring, is concerned that the government insurer's capital reserves could be hurt by the lack of house price appreciation and other factors.
"I am anxious to see how that fund is doing given all the additional stresses that have occurred in this housing market over the past 12 months,” Stevens told a Senate banking panel Wednesday afternoon.
Stevens is now president of the Mortgage Bankers Association. He stressed to the Senators that he does not have any inside information about FHA's current capital position. That figure is determined by independent auditors once a year.
However, the capital reserve ratio for the FHA single-family program edged down to 0.50% in fiscal year 2010 -- mainly due to losses on the FHA reverse mortgage program. "I am concerned that given the softness in the housing market, the seasoning of some of these big portfolios -- like the 2009 portfolio, and other potential impacts of the reverse mortgage program, there may be some impact to their capital reserve ratio," Stevens warned.
"I would hate to see it go negative," he added. "I am certain it will bring extraordinary criticism and focus."
The FY 2011 actuarial report on FHA's capital reserve will be released in November.
Senator Robert Menendez, D-N.J., said he is "anxious" about FHA's capital position. "We will have to make sure we pay attention to this report."
FHA officials said they would not comment "until the new actuarial report comes out after the end of the fiscal year."
