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Reassessing FHA Risk / Diego Aragon, Andrew Caplin, Sumit Chopra, John V. Leahy, Yann LeCun, Marco Scoffier, Joseph Tracy .
- Format:
- Book
- Author/Creator:
- Aragon, Diego.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w15802.
- NBER working paper series no. w15802
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2010.
- Summary:
- Federal Housing Administration (FHA) insurance has doubled over the past two years and is projected to redouble to $1.5 trillion over the next five. Despite clear signs of strain in the FHA's Mutual Mortgage Insurance Fund, a recent actuarial review indicates that the FHA will not need any form of government support. We identify four risk factors that make such a funding request more likely; the review underestimates how many FHA borrowers are underwater and in economic distress; it uses measures of house values that lower loss estimates; it does not incorporate early-warning signals of future losses that are available from mortgage delinquency; and it ignores potential risks associated with recent down-payment assistant programs despite higher losses on previous programs of this type. We propose measures that could be taken to improve the predictive accuracy of FHA risk assessment.
- Notes:
- Print version record
- March 2010.
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