Gordon touts FHA’s role promoting housing opportunities

While Federal Housing Commissioner Julia Gordon addressed using the FHA to expand homeownership opportunities, her presentation at a virtual industry conference did not cover reducing its mortgage insurance premium.

Regarding the Department of Housing and Urban Development’s relationship with the Biden White House, “There’s been a focus on homeownership, and there’s been a focus on housing supply, which is of course, absolutely key to increasing affordability,” Gordon said during the Housing Finance Strategies #HousingDC22 virtual conference. “And there’s been a focus on racial equity, which we know has been really the Achilles heel of the housing market for so long.”

However, mortgage and real estate trade groups have argued a cut in the MIP would truly make housing more affordable for the communities Gordon and the Biden Administration want to support. That did not come up in the discussion between Gordon and Housing Finance Strategies Founder and Principal Faith Schwartz.

“I feel like much of my job is mythbusting,” Gordon said. “It’s blowing off the cobwebs and making people understand that a lot of FHA products are different than they used to be, and there’s a lot of misconceptions out there on the forward side as well as on the reverse side.”

At FHA staff policy briefings, two questions should be asked, she said: “‘How are our lender partners going to feel about that?’ And the other is going to be, ‘how are the consumer advocates and civil rights organizations going to think about that?'”

Gordon admitted at times neither question has been asked. But from her background, which includes running a real estate nonprofit, “I have some sense of the real world from that experience, not something that every policy analyst always has. So it’s good to bring that to the fore.”

Her time in consumer advocacy taught her “that what’s on paper on a policy doesn’t always translate to what happens to a human being. And you need to be able to trace that all the way through to say that you’re doing good policymaking.”

Gordon also discussed the “years and years” of disinvestment by the government in the FHA’s information technology systems.

“There’s really no excuse for where we have found ourselves and the last couple of administrations have taken a very serious run at making progress,” Gordon said. “And I will tell you, if we had not already made some progress…when the pandemic hit, you would have seen a much bigger housing crisis than we had.”

She noted that FHA has approximately 40 different IT systems and some of them are old — but that doesn’t mean they aren’t working.

“Instead, make sure that really kind of the backbone structure of your IT is modern and strong, and things are interoperable,” said Gordon. “But we also are being mindful of the customer experience in interacting with us.”

The goal is for a modernized IT system, while still having the customer experience and alignment with the rest of the housing industry, she said.

FHA is undertaking “a renewed focus on small balance mortgages,” Gordon added. Consumers can buy homes in parts of the nation at an affordable price point but they are unable to obtain credit.

“The buyers are forced to turn to predatory land installment contracts [and] I’ve never seen a good version of that,” she said.

Because FHA does not make mortgages, “We can’t do anything unless we’re working hand in hand with the private market,” said Gordon. “We are continuing to try to make improvements in the way that our lender and servicer partners encounter us.”