“Today’s announcement is a major wakeup call for FHA and the lending community, but no reason to panic.  The two percent reserve requirement was established in order to ensure that FHA could stand the stress of a major housing and mortgage market event.  It is safe to say that FHA is facing that type of event today.

“We are encouraged by the corrective actions FHA has already announced and has begun implementing – the elimination of seller-funded down payments and the recent program changes to help it better manage its risk – that should help FHA come out of the current housing crisis positioned to continue its mission promoting more affordable mortgage credit for borrowers.

”MBA and its members, who originate the vast majority of all FHA loans, have long been leading efforts in Washington to give FHA the tools it needs to best serve its mission.  That is why we are continuing to encourage Congress to appropriate the critical funding that FHA needs to hire and maintain staff and update its technology.”      

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.