Today we are facing a severe economic crisis which is placing unprecedented stress on every sector of financial system.  At the same time a golden opportunity born from the crisis is sitting at our doorstep waiting for us to take action. 

Seventy-five years ago (1934) in the face of the Great Depression, Congress created the FHA and then soon after in 1938, Fannie Mae was created to purchase mortgage loans from banks and establish a disciplined secondary market.  

There have been volumes of commentary from pundits about how both institutions are obsolete, failed in their mission and are no longer relevant.  All untrue!  However it is time to refurbish the interior of each after 70 years of hard use.

We need to make the FHA an independent agency like the FDIC, where every authorized seller/servicer pays an insurance premium to be a “member” and the commissioner is given the tools to react quickly to a housing crisis based on what’s good for the country, without political partisanship.   After all, FHA is an insurance fund, not a mortgage banking entity. Risk is the issue; Risk management is the key component to making FHA the correct point of government facilitation.

The GSE’s are still relevant and their role should be as the aggregator, the final point of assurance of quality, and the dual point of consolidation to allow for investor confidence and transparency.

If we open the door and seize the opportunity, we will take giant strides towards curing the current housing crisis and insuring the next one is less severe.