Housing Official Cites Mortgage Insurer Woes

Congress needs to increase the Federal Housing Administration's loan commitment authority in fiscal year 2010 by $85 billion because private mortgage insurers are too weak to meet the demand for new loans, according to HUD secretary Shaun Donovan. "Even as the housing market recovers, we believe it will take some time for the mortgage insurers to build back up their financial strength," the secretary told Senate appropriators. The Department of Housing and Urban Development is seeking authority to insure up to $400 billion in single-family loans in FY 2010, up from $315 billion in the current fiscal year, which ends Sept. 31. The HUD secretary told the appropriators that FHA's single-family business will be in the "black" in FY 2010. However the FHA's reverse mortgage program needs an appropriation of $800 million to cover estimated losses. "We have not chosen to raise premiums given the stress that seniors are under right now," Mr. Donovan said. However, HUD is willing to tighten loan-to-value ratios and make other changes to "eliminate" the need for government subsidies, he said.