..

well well you are as -- how will you prioritize what can be done under the current authority? clips under the current authority, they can do things like disclose information better. the fha is like communist china in terms of reporting. loan level data, we do not do it. that would help us get around the problem that was asked of mr. benzoin accounting. to show us books crude -- show us your books. reduce more moments, that has to be done here. -- loan limits.

two things they could do -- they threatened a three percent limitation on concessions. it has not been done. one of the members said, it has not taken place. number two, return appraisal panels, those two things would be huge. >> the time of the gentleman has expired. the chair now recognizes the gentleman from north carolina. >> thank you mr. chairman. i may start by thanking the chair and ranking members for having this hearing. it is critically important. an important first step to getting to the basis of what we need to do in this committee. not only about fha, but fannie and freddie. if we don't find some good answers, we are going --

housing in this country is going to be even worse. homeownership ownership is going to be an impossibility overtime. i assume there is nobody on this panel who believes that we don't need fha. is there? there is somebody. >> i think that -- >> either you do or you don't. >> if you do not take steps to reform fha, there is an internet -- alternative way. >> ok, but the mission -- let me rephrase. the mission of at a gap fha -- fha, if anyone believes we should not have the mission of fha. is anybody -- >> the original mission question mark i have no

problems with the original mission. >> the problems we are having sounds to me like you believe that fha is operating outside the mission. part of that has been, as a result of the private market, fleeing, for whatever reason. one question i have is, how do we get the private market to step back into this space that fha is inappropriately, you believe, in. let's talk about that for a little bit. i would love to have ms. gordon 's opinion on that. i would love to have mr. pinto and dr. saunders opinion. if the private market is not going to step into the space,

either we are not going to have the space occupied or fanny is not going to -- going to occupy it, or freddie is going to occupy it. or fha is going to occupy it. all of which currently expose taxpayers, potentially. how would you attract private market into this? >> it is going to be important to have the larger conversation altogether. you can't just address fha in a vacuum. if we really want to fix the housing market going forward. we have to get serious about what we are doing with fannie mae and freddie mac. they are showing a profit now. they have become a convenient piggy bank. we have to address the whole thing together. so that we can appropriate -- >> mr. pinto, go ahead.

i agree with the acting director. the road starts with fha. you have to define the role -- >> we have agreed on the mission. how do you get the private market to come back in? >> they are ready, willing, and able. numerous insurance companies have started. >> what are they waiting on? why are my constituents coming to me, saying i cannot get the private market to finance a loan? that is the question i am trying to get to. >> if you want responsible lending, i think we all do, and the private sector is ready and able to do responsible lending, fha is not doing responsible lending in these areas that are occupied. they are not doing

responsible lending. you want responsible lending. >> after saunders, go ahead. >> i agree with ed. part of the reason, although ms. gordon does not agree with me. >> i am asking why -- how can we attract private capital? i am not looking to blame anybody. i know with the blame is. >> i am not blaming ms. gordon. if we take a look at odd-frank and consumer protection bureau, , or what i call the family and freddie protection bills. must bills will go to fha would they come out of conservatorship. we have to lower the footprint, raise the premiums even more on fha. again, take them out of the subprime end of the market. >> time of the gentleman has expired. the chair now recognizes the gentle lady from west virginia. >> thank the panel.

i would like to start on the shortfall in -- the $16 billion we have talked about. capital ratios in the negative. i believe i heard ms. gordon, i have not been in the entire hearing, so excuse me if i misconstrue your comments, basically what it would be would if it was called upon to shift from one account the the other, and that there is nothing -- there is nothing the taxpayers would be liable for. is that your essential statement? >> no. i am saying that right now there is nothing that is going on that requires what i think people take of as a bailout. congress has to vote new money to do something that was not contemplated. what is happening right now is contemplated, that from time to time, and agency with a mission like this is going to be in dire straits.

-- theseunderstand me are financial dire straits. it is very important to get the financial house back in order, through steps like the ones that fha has taken and some of which they are seeking additional congressional authority so that they can take. >> if there is an infusion from the treasury, that would impact taxpayers, because the treasury is our tax dollars, correct question mark >> yes. >> ok. my next question would be to the experts on the panel, is there a mechanism that if an infusion of capital from the treasury becomes necessary, which it looks like it might be , is there a mechanism for fha to repay this as part of the process question mark >> yes there is. the key is to change the budget accounting, which is what cbo has recommended, to show the

true risks associated with fha. all these numbers you are talking about are artificial. they are artificially low. in terms of the bailout that we are talking about. >> you think the $16 billion is a low -- like low in terms of real risk. cbo has made clear in its work in respect to fair value accounting. if you are going to -- i do not believe in growing fha's way out of this problem. i think that is really what they thought they would do in the early 1990's. it failed. the answer, as i indicated in my testimony, is to cut the government insurance down to 30% from 100%, so that the lender is on risk and then keep the premiums so that you can recapitalize the funds to four percent or five percent. that way, you would start

getting yourself into a responsible economic program, as opposed to worrying about supporting the market if it needs a support, by inflating home prices. >> thank you. i am going to jump to another area, i am only in one minute 45 seconds. i was the ranking member on the housing subcommittee with ms. waters when she was the chair. we had were than a few meetings of this impending doom. this has been talked about in our committee for years. this direction that the capital ratio is headed. the response from the secretary of hud and others has been that the newer loans, the ones being in now, are going to be the ones that will sustain the fund going forward and the past ones are the ones that are really messing it up. all these loans are going to be cycled through.

from what i am hearing, that is not what is happening here. mr. pinto, would you have a response? >> absolutely correct. what is going on here, these projections are made, that is not credible. the projection that was made in november was based on a july interest-rate projection. in the report it talks about if we are in a low interest-rate environment. i think everybody agrees that we are in in a low interest-rate environment. if we are, it is not $16 billion negative, it is $31 billion negative. the last recession ended in mid-2009. it does not feel like it ended, but officially, that is when it ended. fha is very vulnerable to a recession, as the chairman said at the beginning. very vulnerable. if there were to be a recession , anytime in the next years, just a normal recession, fha would suffer how distraught the glosses and the taxpayer would be at risk. but only today have all these negative economic values, then

they run into some additional losses that they never projected. >> thank you. >> i'm of the gentle lady has expired. we now recognize the gentleman from california. five minutes. >> thank you. the fha may have mispriced risk, but i will point out the private sector did worse. s&p stood as the crown jewel of the private sector's ability to price risk. they are in the business of telling everybody else in the private sector what the risk was. now, a judge or jury will determine only the simple fact -- were the negligent in this pricing the risk or fraudulent? since to: -- since 2010, we passed legislation that pushed the fha toward higher fees. now it appears they are doing a better job at pricing risk.

if anything, pricing it high enough to make a profit. last december, the secretary of hud testified that fha's marketeer was contracting. i want to read -- market share was contracting. i want to read this, we worked on a letter that i thought was important to prod regulators to provide mortgage lenders with a safe harbor. now that they have a safe harbor, let's hope that concept is made solid. i do not know why the private sector is not laying a more robust roles. ms. gordon, you testified that there would be -- would have been another 25% decline in home prices if fha had not been in the market. i think that comes from movies -- moody's, and you are

nodding yes. can you tell us what this country would have looked like if we had had another 25% decline in home prices? do i have to watch one of those post-apocalyptic movies? >> watch one of those movies. i can hardly imagine. there are so many neighborhoods that still are in deep distress because of the private, toxic subprime loans that were made and because of the foreclosures, the subsequent recession, the unemployment. imagine if we had had 3 million fewer jobs. if we had -- we would not be on a road to recovery today at all. >> for the record, i will define your answer is somewhere between a quogreece and "thundee ."

in the 12 white house areas -- and was critical. is the fha's reserves higher, are they making a profit on those loans that they are guaranteeing between 625 and 729? >> i do not have the numbers in front of me. one would imagine that that is a possibility. maybe he has the numbers. >> i would question whether or not that it the case. the reason i question it, while fha had hoped that it's 2010 business would be performing better enough to bail out the rest of the fund, if you look at the latest report, you will

find that the present value of that business is falling. >> i beg to differ on a couple points. i was asking about loans that make up about one 20th of that book of business. >> -- you are telling me the temperature in the whole country. >> i am going to replay my time and just note for the record, that the -- in terms of default rates, private-sector loans at five percent, subprime at 22%, yes the fha overall is at nine percent, but for those loans made in 2011, the seriously delinquent loans are only three percent. to say that the fha's recent loans, you have the actuarial value that says they -- their book of business 2010, 2011, 2012 should raise their capital.

then you have the actual projected real life experience of 2011. a3% default rate or it believe my time has expired. >> certainly expiring. ms. gordon, any further comment? >> we can all agree on if we do a better job of mitigation at fha and elsewhere. that will help everybody's books. >> chair now recognizes the gentleman from new jersey, mr. garrett. >> just an issue of where the private sector is -- those loans in the private sector, if they go bad, the taxpayer is not on the hook. they made bad decisions on these things, it is not the taxpayer that has to be the price. onto the panel. this has been interesting and some of the rhetoric we have heard so far. from some members. ms. gordon using the word terrorism in the financial sector. that people have been terrorized, areas have been

targeted, what have you. i suppose that some of the government policies that also went after the low income and certain areas, that that might be government counterterrorism in those same areas. * aside, i think the other -- aside, i think the other role is an interesting one. and that means that if you would not lend money individually to your neighbor to help them buy a home, because of market situation, but you want the government to use taxpayers dollars to go in and help them out and get a loan, that is a countercyclical nature of the fha. something that you individually or personally or investment wise are not willing to do, but you are happy to have the taxpayers got up into that role. that is the role you are suggesting for the taxpayer through the fha. when you do require the fha to

take a role, there is a price to pay. t are worth,prudencn not those who saved up their money to get into the market tomorrow or the next day, because when you act in this manner that the fha has done, what happens is, as this panel has indicated, the rates later on as they are now -- the costs go up. that's rude and individual has to pay the price for the failed -- that prudent individual has to pay the price for the failed action. and the buyer finds himself out of a house or in a house underwater. i am not sure why anybody would be advocating for imprudent investments and lending or for utilizing though -- penalizing those individuals for buying

when they can afford it. let me turn to dr. sanders as to what the appropriate role for the fha is. you approve of the appropriate, historical role of the fha. that was to help out first-time home owners in those low income communities and areas were individuals who cannot afford to buy a home. fha was created in a manner. as an aside, i know our president has been on tv frequently defining who the rich are in this country -- anybody who makes over $250,000. isn't that exactly what the fha is now morphed into question mark we can now facilitate those rich people buy homes question mark >> yes, the fha has strayed from its original mission. even on the minority side, you have to be very careful about harming. if the score gets too low, they are worse off rude not all of them, but many are worse off in

home ownership under the new rules. this is not helping, it is hurting. >> let's drill down on that a little bit. what we think is helping communities and homeowners is actually hurting them because it is helping facilitate people buying houses that they cannot afford and a downward market, putting them in houses that will soon be under water and you are adding another facet, that gives them a lower pico -- fica score. >> i do not ever think it is upper housing policy -- proper housing policy to encourage households to take a lot of risk on. that is what they were doing when they strayed from their original mission. of course, in history -- and, by the way, going forward, the book looks good now. that may be true. remember, everybody was saying back in 2002, the book looks great. everything is improving. well, it didn't.

he still had 25% serious delinquent to rate. the problem is, you can't just look at the current state and assume that is the future. we will have other recessions. >> mr. pimco. >> the nar just about an ad today,, they say that fha provides access to credit for millions of americans exactly the way congress decided to operate 80 years ago. i went back and looked. 80 years ago, the maximum loan term was 20 years. now it is 30 years. insurance claim rate -- .2% in the lives of over 20 years versus 11% annual now. the loss rate has increased 400 times. >> thank you. important points. i appreciate. >> the time of the gentleman has inspired -- expired. as you know, votes are anticipated on the floor shortly, perhaps as early as

11:00 a.m. we will clear one more member on each side and adjourn at that point. i understand the democrats have their retreat today. we will not be dabbling back in. we will recognize the gentleman from new york, mr. meeks. you can probably figure out whether or not you will be recognized. >> i want to thank you chairman and ranking member for this hearing. let me ask some quick questions. i know the ranking member of of housing is chomping at the bit over here. i will try to give him a couple minutes. i just heard mr. sanders -- you stated that" in some of your testimony that the policy or the mission of the fha is that it can no longer serve first time buyers or minority and low income borrowers. isn't it true that in 2011, over half of all african-americans

who purchased homes purchased in fha mortgage question mark and over 49% of latinos did so with average or financing. as well as 78% of all financers were first-time home buyers question mark is in that the mission fha is all about? >> i did not say they were not helping first-time homebuyers. the fha does serve more black and hispanic households. my point is that while that may be true, do we really think -- again, throwing them in front of a moving bus with the delinquency rate so high, is that proper public policy question mark or are they better off doing -- >> what we just said before, if you look at the delinquency rate, it is down in one year it was six percent.

in her same testimony, you talked about in the d.c. area, foreclosures, the majority of foreclosures -- privately funded subprime loans that were not insured by fha. i see ms. gordon. >> i want to say, with all due respect, what they are saying is lending the firemen for getting the house wet. fha did not cause the crisis. they were virtually absent from the market when this got started. fha has come into neighborhoods that have been in something of a death spiral with foreclosures and the like and tried to put some kind of floor under that and allowed people in those neighborhoods, many of which are neighborhoods with large communities of color, to get their feedback under them. >> even in mr. pinto's

statement, you said they are concentrated in low and moderate income communities. that is their core mission, to help credit murphy families. -- creditworthy families. i yield my time. >> i will come back. >> great, i will keep going. [laughter] mr. pinto, in your questioning -- your answers to -- i think you might want -- your statement seems to me that you are not for the mission of fha. you don't agree with it. you are saying in your statement that it was overly concentrated in low and moderate income communities. that is exactly what their mission is. i think you raise your hand and then put it down, so i want to give you a chance to say -- if you are not for the mission, then state it.

these say that -- congress ordered fha, freni may and freddie mac to go down an arms race of weakened lending practices that -- i am not against fha's mission of serving working-class families and communities. i am against abuse of running practices by fha in those communities. at this but i have documented. if you go to page 25 of my oral testimony, you will find an explicit way to serve those communities exactly in a way that is not abusive and does not finance failure. >> all those delinquency that you said -- therefore the private industry that had all of those delinquent loans that called for -- some of them, they

should be exempt from what you just have been talking about. i see ms. gordon chomping at the bit. >> i think it is insane to consider fha abusive lending. this is fixed rate, under long- term, sustainable underwritten mortgages. we know what toxic loan products look like. it does not look like this. the unc has recently done and in depth study, a group of 46,000 homebuyers who were given these 30 year fixed-rate mortgages, sometimes with lower down payments than fha required. those loans have outperformed all but the very -- >> the time of the gentleman has

expired. i want to announce that the house is in recess at the moment. several of you need not rush off. chair now recognizes the chair from texas. >> one of the questions asked is a good one. what does it take to get the private sector back into this market? i think a couple things would help that process. one, if i was a privately -- a private company, and the federal government would subsidize my operating cost, that is what we do with fha. i do not take any of their operating costs out of the fund revenue. none that i had an unlimited credit line of the united dates -- united states treasury. i can be very competitive and making loans, competing with fha. the truth is, in the marketplace today, it is very an expensive to sanitize these mortgages --

running them through fha, fannie mae, or freddie. you have 90% of the market being sanitized for very low risk premium. if you want a more private marketing american, you have to level the playing field. it is not level. comments. >> absolutely. i testified three years ago that housing policy in the united states created a brick wall that the government mortgage conflict has created and that context is impenetrable. it is 10 feet high, very wide, and it goes underground so you cannot dig under it. you cannot go around it. the private sector does not like to break through brick walls. a like to go into opportunities. as long as the private sector -- the government mortgage complex, which is fannie,

freddie, the fha, all of these entities are out there with their different programs. it is very difficult for the private sector to compete. the advantages are not well understood. ginny mae reduces the expense and rates on fha loans by a substantial amount. the result is, those securities sell at a higher present a securities market and a fannie mae security. that is an implicit subsidy that goes to fha. it makes it very hard to compete. that is why these higher income loans -- why are the ones being made? the reason they are being made is because the ginnie mae subsidy. you add in the ginnie mae stuff and those loans are able to be done. the arctic is not a level playing field. we need to get one.

>> i agree completely. ginnie mae pricing right through freni and freddie securities. that is the key factor in terms of trying to compete. in the world of milton friedman, we could still have a pony express if you want to subsidize something like that. but we chose not to. the reality is, nobody is going to get into this market as long as the government is blocking them with this cheap pricing. >> before you respond, mr. sanders, the other thing that i did not mention -- new risk that everybody is trying to figure out how to price. it is called regulatory risk. it falls onto the private mortgage market but not necessarily to those loans being originated through fha created is that correct? >> that is correct. the protection bureau admits fha

and freddie and fannie areas we have a stringent set of standards, including prime risk and the associated lane with that. but they seem to waltz their way out of this. they are not really under the regulatory supervision of god frank -- dodd-frank. we have to have rules governing the fha. that make it a level playing field with the banks. the lenders. >> really, comparing apples and oranges when trying to compare -- we are going to have a hearing and our subcommittee. we will dive deeper into this so we can begin to contract the -- contrast these entities. from an accounting standpoint, regulatory standpoint, to make sure we can build a model here and tell how well -- why these entities are not able to

compete. one must question for ms. gordon. you said that if the money is advanced to fha, it isn't a bailout because it is not taxpayer money. it comes from the treasury. do you know where the treasury gets his money question mark correct we discussed that already. that is not what i said. congress does not have to vote on some kind of bailout. >> time of the gentleman has expired. the chair now recognizes the gentleman from massachusetts. >> iq. -- thank you. you raised a lot of good questions. i want to make a few points. we have not publicly stated, though i notice in your testimony, that at this very moment, fha has $30.4 billion worth of cash to cover it. i understand they have some concerns. not arguing the point. this is not a crisis that is going to happen tomorrow.

not right away tomorrow. i also want to be clear, the fha has taken -- i have a list of 15 different steps they have taken over the last several years to address these issues you mention. i would like to submit a list for the record fo increasing the mortgage premium rate at least four times. i am not even sure i like that. at least it addresses your end of it. it addresses different down payment amounts. the new debt to income ratios. they have done a whole bunch of the things in general that you have tested. they are in the middle of doing others. i am not just commissioned not do more. i think it needs to be recognized as well. if things have gotten better over the last two years. i want to focus on the record. i also want to say clearly that is the the chairman or anybody else constable -- put the will

-- bill out, we should do it today. we could be that the senate for the next two years. instead of waiting until we beat up everybody we want to to put out a bill. let's put out a bill that we voted last cycle. let's put it out today so that we can get moving on some of the things the fha needs legislatively. i think everybody agrees we want to give them the power to do these areas let's do that read i also want to comment and some of the things i said earlier on prudent lending. who is against prudent lending? the question is, define prudent. only lend to donald trump. that is prudent. he can pay it back. there is no middle class. the question is always about the ability to pay. i want to get to some of your comments. the reason is, all of these agencies deal with the amount of money available and does not take into consideration regional differences. the cost of housing in my district is 2-3 times the cost

of housing in the chairman's district. wages are approximately 70%-100% higher as well. the question should not be on, she has costs, but how much the borrower can afford to pay. displays on all different things. down payment requirements. i could not afford to buy any help in any district if you have a 50% down payment requirement. what should a big? your question. to sublease run numbers out -- to simply throw numbers out. the question is, what does it mean to middle-class? can fha actually accomplish its mission based on these numbers? none of these testimonies give answers to that. they raise questions, they do not get answers. i need to see answers as to what the impact is of some of the things you are suggesting. if we get -- i do not think we

will find ourselves significantly on different pages. maybe we will. right now, we do not have it. if you have the statistics, i would like to get them. i read your full testimonies, including your multipage thing. i did not see them. as a nice, generic, and some studies of what happened in poor neighborhoods. fha belongs in middle-class and lower income neighborhoods. we all agree with that. what is the impact? even the shifting, for instance -- the va part. i like the proposal. the concept of having somebody having skin in the game is a good concept. what does that do to rates? if you say we will have 10% skin in the game, does that mean memory trick is 20%? if it does, that means you are kicking out a lot of people. i guess i am asking those of you who have been enjoying kicking

the recent history of fha. i hope you're having a good time. it does not only move forward. it does not help us get back to that mission. for me, i need you to tell me what are the impact on these rates, who are weakening out of the housing market, and how will it impact these neighborhoods? pages 22-25 and my testimony explicitly answers those. >> time. the chair now recognizes the gentleman from california for five minutes. >> thank you, mr. chairman. what i would like to focus on is, what f aj should look look like going forward. if we get a sustainable housing market. a lot of the work will --

assuming that that happens, we will all be deciding what that looks like, what would we like fha to look like question marks to do things i would like to focus on. one, in terms of the original mission. i am from orange county, california. a very high-class area. -- high-cost area. a lot of loans for people have more money for a down payment, but because loans are so treat, but as little down as they can. all kinds of things that strikes me as -- i take your point, ms. gordon about how we have softened what would have been a worse market. that clearly is not the original mission of fha. i heard from mr. pinto and dr. sanders about the original mission. unlike the other two -- i would like the other two, what loans

should fha be making in this ideal market in the future? >> as i say in my testimony, they should be targeted to the income of the borrower, not the loan amount. that would be by geographic area, on median income and consequently, if your borrowers are in your district are of certain income and the qualified for the loan, and those are the loans that should be made. you should not have builders building up to $800,000 limit. because they are able to get it from fha. even a medium income in the area is not at that level. it also addresses the fact that when interest rates go up, the amount of money that qualifies falls. you have to take that into consideration as well. on down payment, it is critical that the down payments be reflective of the risk. >> i will get to that. >> mr. pinto referred to

something before, i think i am fighting for the same thing gail is fighting for. it is -- the credit available in these communities in the country and to people of lower wealth, people of color, younger people -- in my ideal world, you see both fannie and freddie and the private market competing for that business. i would far prefer to see most credit worthy borrowers served by a private market with some kind of government backstop so that government is not on the hook for the first loss areas see fha fill in behind that for people who otherwise need some assistance. i think we all share that vision. we may have slightly different views of how to get to it. i am not sure how you pull fha back before you make sure there

is something coming in behind it so we do not go into another round of -- >> i get that. i think there is agreement here that we would like to see fha go back to what it was originally designed to do. as much as i, they should not be making 700,000 dollars loans. there should be other accommodations for that sort of loan. let's talk about the -- whether fha insures from dollar one. when you sell a house, it doesn't cover the commission, essentially, fha insurance is covering from dollar one of the potential loss. i would like to start with you again. you think that fha should be doing that? should someone else bear some of

the risk? the role that fha would ultimately play, this is part of the historical mission that fha is an insurance program that is backed by the u.s. government. i think that is an appropriate role. we need to make sure there are ample opportunities and avenues for credit elsewhere that do not have -- >> lummi gives him one of the final seconds. >> you can do a risk share program within fha. private risk adverse dollar loss. fha takes the remainder down 30%. the lender is on the hook for anything deeper. >> time of the gentleman has expired. we will call upon two our members and adjourn. mr. green from texas is recognized. >> i thank you in the ranking

member for the dinner that we had together to engender a degree of stability -- civility and friendship. i want to show the people that are watching at home that we really did have a dinner. let me start by saying to you that i did not come prepared to defend fha today. i feel compelled to do so. fha did not create the housing crisis. some things bear repeating crude fha did not create the housing crisis. witharted in the 1980's the so-called exotic product. i am sure you remember some of them. for fear that some do not, let me express to you what some of the more. rates that coincided with prepayment penalties. fha do not create the rates.

such that you are locked into a loan and cannot get out unless you pay some large amount of money. qualifying buyers for teaser rates, but not qualifying buyers for the adjusted rate. fha did not create a product. dodd-frank addresses these radix. lynn mortgages. -- balloon mortgages. option arms. underpay and we will tax what you don't pay onto the principal. no dark loan. rating agencies, at least one of which is now being prosecuted, that were literally giving those who desired an evaluation what they wanted. credit default swaps.

in the tertiary market. so that you could gamble together with the taxpayers money, in a sense. originators of loans not having to be responsible for the false -- default. this was the biggest part of the problem. when we allowed the originator to care less about whether or not the default, qualifying them as a homebuyer than a homeowner. from that onto the secondary and tertiary market. somebody else will worry about the default. this is what it was all about. let's not kid ourselves and try to blame the cra and fha for what happened in the 1980 was and ended up with the crisis that we had to give some attention to. fha does ensure, does not lend a penny, but does ensure some

loans that some would consider high dollar loans. would it surprise you to know that in october the average loan amount for fha was around $180,000 question mark less than $200,000. the entire portfolio of them has loaned that average around $150,000. they are not a culprit. let me ask one question. then i will yield some time. i'm one question to the entire panel -- who among you would end fha? and it rather than mandate -- end it rather than mend it. acknowledge your position if you would, by kindly raising your hand. mr. pinto, i do not see your hands going up. i would assume that you would not end fha. time is of the essence, this will require aes or no answer.

-- a yes or no answer. >> earlier, not a yes or no. >> i will conclude that under certain circumstances, you would. but it all i can conclude. anyone else who would end fha? let me close with this. i came to congress to represent everybody in this country. in so doing, i understand that there are many people who cannot go back to the next 30's when you had 3-5-year loans. when the interest rates were exceedingly high. fha has provided middle income persons with an opportunity to engage in home ownership. we have to mend it. we did not end the big banks. we gave them a second life.

i am going to fight to keep fha. >> time of the gentleman has expired. but the gentleman now, having paid for half of of the dinner, i certainly recall it. [laughter] gentleman from georgia. >> thank you mr. chairman. to my colleague from texas, fha does not have to meet the same d-he dodndards that frank requires companies to have. ms. gordon, i want to clarify -- i think the gentle lady from california was talking to you about the negative 1.44. you are explaining that this does not have to do with the $30 billion they have in the bank, but this was something that is they all come due at one time,

the fund would be a little bit short. just for clarification, so i can get the perspective on -- what is a little bit short? >> the point i was making, fha has cash on hand as has been pointed out that several of the members today. the measurement that we are talking about is a measure of its fha stopped doing business today and paid out its claims, not all at once, but over the next 30 years. >> what is a little bit? my numbers say it would be $16 billion. >> we do not actually know what the number is. this is not the same number -- >> what would your little bit be? >> what i am trying to look at is what the value is that we are guessing. -- getting.

>> you're not going to answer the question or i am not asking it right. , fhaesident obama's budget requested millions of dollars to cover expected losses during this fiscal year. ultimately, they did receive $1 billion from the doj settlement with the bank's and averted a taxpayer bailout. what you all know about fha's current financial situation, could each one of you give me an estimate on how much money you think the fha will need to cover their losses in fy 14? >> i think the number will be in the -10-$12 billion range.

negative. >> that is a reasonable estimate. it all depends on whether we actually get out of this super slow economic growth or if we have this double dip in the economy. then, all bets are off. >> fha has a lot of real estate owned on its books right now. a lot of how much loss is buried in that real estate owned. well i think $10 million-12 billion dollars make sense, it could go a lot higher. >> i am not the economist, so i cannot figure a number. i can say it will depend a lot on the housing market and on how well we continue to do to engage in loss mitigation, an area where i think the fha is significant room for improvement. some of the effort they are making in terms of distressed asset sales and among the changes they made to the reo

process, all of those were together to determine how much money will be lost ultimately. >> there are approximately six private mortgage insurance companies that write private mortgage insurance. if i understand it -- they are under regulations by their states as to capital requirements as far as being able to cover their losses. i would like to ask each of you , had he think they would rate the fha as compared to some of the private mortgage insurance companies? quirk>> if you took away accesso the treasury, fha would be closed down by every state regulator in the country,

because they have no capital today,. -- today, period. who would go through roughly 700,000 delinquent loans, 60 days or more, how much money you expect to pay on just those loans you know about, and that exhaust the 30 billion plus. they have no money on a regulatory basis or a accounting basis. >> the time of the gentleman has expired. i would like to recognize the ranking member. >> consent of the following materials to support the fha be entered into the record. a statement from the national council, a statement from the local initiatives support corporation, a statement from a partner with stomach partners, which specializes in mortgage finance.

>> without objection. i would like to thank each of our witnesses for coming to testify today without objection. all members will have five legislative days to submit additional written questions to the chair which will be forwarded to the witnesses. i would ask our witnesses to please respond as probably as you are able. that objection, all numbers have five days in which to submit materials for inclusion in the record. the chair announces the next full committee hearing will take place wednesday, february 13 at 10:00 a.m. with fha commissioner carol. that objection, the steering is now adjourned. -- without objection, this hearing is now adjourned.

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>> this week on q & a author and

columnist amity shlaes discusses her latest historical narrative titled coolidge >> amity shlaes author of coolidge, when did you first get interested in this president? >> i was writing my recent book forgotten man and everything was broken which forgotten man is a book about the 1930's and how the economy was broken. and i thought what happened before. and there was a period when it was fixed. and that was calvin coolidge. i thought i've got to go back and figure out what went right in the 1920's. >> talk about him. i mean do you read about him i mean do you read about him today?