they were extended above the gse loan limits where you could get an fha loan bigger than any gse loan. those would be two on the table. you sometimes hear about risk- based pricing, that fha should be considering. >> i propose to the seller concession change and i think fha should not have policies in place expose that in that regard. let me talk about the risk-based pricing. i hear it comes up from time to time. one of the mission roles that fha has served is an access point for demographics that otherwise would not gain access to the home buyer market. if you look at the way pse has priced the mortgages today, at the high end of the curve, it gets expensive for no-down- payment borrowers. if you can control for qualification, for documentation standards, credits or the ability to repay variables, the down payment should not be a variable and tell you get into a distressed scenario. you can control the distress by making sure the standard is there. we also know down payment is the single biggest barrier to home ownership. it particularly in packs those borrowers who do not have large

to me, certainly one of the more important of the gse is the perception that the creditors should be protected. thews something treasury could have done. fha could have done and certainly i think in my. . >> would you have done it? >> i -- absolutely. [inaudible] fhfa can put them in receivership. >> they don't need. >> okay. yep. they get the shareholders out of the equation. until you take them out of the equation they are in a position where the government is under law has stepped in to the position of the board and management to try to restore these institutions to financial health. and what that means is that fhfa constantly get whip sawed with the demands agree, we want you to support national housing policy and they come back and say the legal responsibility is to support the gse. that means tighter credit standards than other policy makers might want. in other words, the public, private mix that made the gse so hard for people to deal with in the beginning is continuing to confound people. but i agree with you. i mean, they should be in receivership, at that point you can mak

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it has to do with the gse what it looks like.it's important to remember that fha is essentially almost effective 100%. there are risks and other things, but the government is taking on the credit risk in athens. in what i would call a conforming market, the government should be explicitly offering some form of mortgage-backed security in which principal credit risk is capitalized by other institutions and private capital head of the government or the government is offering the ongoing market in the future. they were to fail, the government would stand behind them. it is far more limited. the question is, what do you want the government doing and in my mind you don't want the full credit exposure. he wanted doing that in the part of the market that needs to be served. it takes a far more limited risk and does it explicitly. and if we decide that we are not going to have any success with winding down, it is inevitable in my mind that fha is the larger part and will be taking a bigger part of this to review. >> [inaudible question]

i was with the other gse from 1990-995. i became director of regulatory compliance, and i have to say these stress tests were dictated, and they wouldn't have caught some of this. they didn't allow for freefalls in the way the assumptions were created. and i worked with working with hud on how the regs were going to be implemented. there was concern because people were thinking where are we going to find all these people qualified for these mortgages. and there were underwriting efforts to make the guidelines more friendly towards nationalities that may have a different way of dealing with home buyering like where you have, um, extended family type of support, gifts and things like that. but, um, but there was concern because it is a public and a private company with market share. and countrywide was coming in with securitization. but at that point my perception was that fraud was really -- you had criminals. it wasn't until housing really became seen as an investment good that everyone got on the bandwagon, and the mortgag

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complain or state anything publicly to get them in trouble, we have a public health crisis with the gse and it needs to be acknowledged by a car leaders. there is a huge backlog at the veterans hospital and around the country. generally speaking to people try to do is the best job that they can. but there is a huge crisis and 2 million people who serve in iraq and afghanistan but the 25% have spee to est and those of the one said acknowledgement. only a small percentage seek treatment and it is not that good or effective. a lot of it is medicinal. this is a problem that is not going away. these people walk our streets and need help. digest want to say itouch on this with one of the survivors. end has horrible peach est and ultimately overdoses and dies one year after the attack. today's after the overdose 58 called to let his family know he was late for his appointment. there is a lot of talk about this during the election year. >> a backlog is 50 years old because we did not acknowledge during vietnam's flosses not on the exponential but incredible. what we should have learned from the

then you have gses. those are fannie and freddie. household, corporate, financials.k in the '50s and '60s you can see it was tightly compressed, altogether there. wasn't a lot of borrowing. but then the country started getting leverageed. you can see the mountains start to climb. the '80s, '90s, 2,000, accept rition and climb to 2012 at 350%. economists say the country is overleverageed so if the interest rates rise even slightly, all the sectors may have a hard time paying the bills. >> former democratic senator evan bayh. >> servicing the debt is hard now. this is with interest rates at record lows. god forbid something should happen to cause the interest rates to go up a little. back to where they ordinarily would be. burden of the debt will become immensely greater and start taking away forever else. as tough as this is, we haven'tbe seen nothing yet. interest rates eventually go up. >> economists john taylor. >> if the interest rate goes from 2% to 4%, doubles. the amount that you have to pay on a given amount of debt. with the debt so high, that is a lot of mon

governments tried to create faux guarantees when they set up the gses when they created the structurel financing and faux guarantees whether they were applied or assumed, we all know how it turned out. taxpayers ended up getting the bill when government took over the space. and then we get all the faux guarantees of fixing the original faux guarantees as the intrusion really did get worse. i take you back to september of 2008 when the gses were put in the conservatorship and then treasury secretary paulson said the following quote. i attribute the need for today's action, talking about conservatorship, primarily to the inherent conflict and flawed business model embedded in the gse government sponsored enterprise structure and to the ongoing housing correction. well, first of all, how many experts have we had on lately that have said housing is doing much better. today's kate shiler seems to be ongoing proof of that, but is it enough? no. the last issue is the confusion continues. usually when you make a mistake and then make a mistake to correct the mistake, at some point you try to

is it the other gse, director of portfolio policy and then became director of regulatory compliance when both ao forms. i have to say the stress tests were dictated and they wouldn't have caught some of this. they would allow for pre-float in the way the assumptions were created and i worked with had on how they were going to be implemented. there was concern because people were thinking, where are we going to find all these people qualified for these mortgages? for underwriting efforts to make headlines from it with nationalities and have a different way of extended family type of support, gifts and things like that. there is concern because it was a public and private company with market share in countrywide was coming in to securitization. but at that point, my perception is that fraud was you had criminals. it wasn't until housing was seen as an investment good that everyone got on the bandwagon and bankers came in. so that was my perception. we did the exotic products at that time for tiered payment mortgages. home equity loans were just coming on board. and the low doc loans were m

congress made the decision to allow the gse loan limit, but kept fha. >> can you implement that? >> i do not believe given that congress explicitly extended those higher limit that we can take that step. >> for us to help you do that? >> we have supported before an ioc begin today at going back to this makes real sense. i will go than that that we should they had a pad to go back to even lower limits that existed before the crisis in a way that is inconsistent with how we do housing finance reform. that is a larger question that the media step of going back is one we would support. >> i hope that we can look at the home mortgage insurance. the way i understand it works is private mortgage insurers when you get down to a certain loan-to-value ratio, the insurance -- the premium is dropped, but also the insurance has dropped. and yet, you have a trillion dollars a month on your, what the loan-to-value has dropped. they are no longer paying premiums, but she keeps a guarantee in place. that doesn't make sense to me. why don't you continue to make the homeowner who has a guarantee co

similarly weird streamlined these short sales and on our practices with his recently announced by the gses to provide more families the opportunity avoid foreclosure while reducing costs to the fha. we dramatically increase the use of alternative disposition for defaulted loans, including our new distressed asset stabilization program. the improvement and recovers to fha from this program is estimated over $1 million this year alone. we're also taking proactive measures on new loans, in particular reversing a policy change made over a decade ago that allowed borrowers to stopping premiums after the loans a certain loan-to-value ratio. this change let the fha without premiums to cover the losses on loans held beyond the period for which those premiums were collected. reversing the policies is expected improve the value of the fund by $2.6 billion in this fiscal year alone. in addition we will raise out and you mortgage insurance premiums. we asked me this will increase cost to new borrowers by about $13 per month but it will also further reduce our footprint in the market while adding an s.

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