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Getting a grip on housing-program oversight
comments (0) December 11th, 2008 in Blogs
Richard Defendorf, contributor
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Those charged with developing and implementing housing stimulus and foreclosure prevention programs know the process is a lot like herding cats.
One aspect of a program might seem to be under control and yielding positive results while another strands itself in a tree. Program oversight is critical, but how does an agency oversee programs that have thousands of players and many more thousands of clients?
A story in Wednesday’s New York Times points to housing experts’ concerns that the Federal Housing Administration, whose mandate is to insure companies that make mortgage loans to first-time and lower-income home buyers, doesn’t have the resources to weed out abusive and fraudulent lenders.
Overseen by the Department of Housing and Urban Development, FHA wasn’t especially busy during the subprime boom, when borrowers could easily get conventional, less expensive loans. But now that credit is tight, FHA loan endorsements have been plentiful – more than 96,000 in September, which is triple the endorsements issued in September 2007, he article points out.
But increased business at FHA increases the need for the lenders who essentially serve as contractors in originating and endorsing FHA loans to issue loans prudently. If too many of these lenders certify unqualified buyers, another subprime-style mess could be in the offing. There in fact are growing concerns, the Times notes, that subprime fraud artists have set their sights on F.H.A. “It looks like an incoming tsunami,” said HUD’s inspector general, Kenneth M. Donohue.
Over on Capitol Hill, meanwhile, the Congressional panel charged with overseeing the $700 billion bailout has targeted the Treasury Department’s failure to support the foreclosure reduction plan that the Federal Deposit Insurance Corporation proposed in mid-November. The panel also asked Treasury to “outline its approach to bring down foreclosure rates,” as the Times put it.
It’ll be interesting to hear Treasury’s response. We think that plan got stranded in a tree.
posted in: Blogs, business
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