Magazine article American Banker

Audit Could Dictate Gov. Finance Role

Magazine article American Banker

Audit Could Dictate Gov. Finance Role

Article excerpt

Byline: Lew Sichelman

The annual Federal Housing Administration actuarial review could point to the government's future role in housing finance.

"It's all going to turn on Nov. 16th," said Brian Chapelle, a founding partner of Potomac Partners, a consulting firm. "That's when the actuaries predict how the 6.5 million loans in the FHA's portfolio can be expected to perform over the next 30 years."

Speaking in front of a housing policy committee at the annual convention of the National Association of Realtors, Chapelle noted that the FHA's book of business from the past two years is performing well, with reserves up and credit quality improving.

But the most important part of the review, Chapelle said, will be the audit's house price projections.

"It's going to be a tug-of-war between how loans are performing and housing prices," he told the NAR committee.

"If it's bad," Chapelle said, "it's going to unleash a torrent of criticism about government in housing, how it's ruined the housing market and it needs to get out of the business. …

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