With virtually the same level staffing that it had when it served only 3.5 percent of the mortgage market a few years ago and computer systems that are twenty to thirty years old, the Federal Housing Administration is serving much more than it was designed to handle, the former head of the agency said today.
A patchwork of 37 computer programs that date back to the early eighties and a “sadly understaffed” workforce probably won’t change until FHA becomes an independent agency apart from HUD, said former FHA Commissioner Brian Montgomery.
“What a difference it would make if FHA could keep 26 cents on every dollar that it generates for the Federal treasury. Even $100 million of the $5 to 7 billion it generates every year would make a difference in staffing and computer systems,” he said.
Montgomery said the Office of Management and Budget provides only enough to maintain FHA’s computer systems, not enough to modernize them.
Though no proposal is on the table to separate Ginnie Mae and FHA from HUD, Montgomery said the two agencies would be better able to get the resources they need if they were autonomous. Together the two entities generate $6.4 billion a year in surplus revenues.
Regarding reform of Fannie Mae and Freddie Mac, Montgomery said the administration “kicked the can down the road” by putting off action until a series of public hearings. With the off-year elections pending in the fall, he said reform might be delayed two years or even into the next administration. “What happens in November will drive GSE reform,” he said.
Montgomery also expressed doubts about continuing higher FHA loan limits, which are $729,000 in states with higher median sales prices. The loan limits will expire at the end of the year unless Congress acts.
Montgomery spoke at the annual meeting of the National Association of Real Estate Editors taking place this week in Austin.