Government is famous for moving at a glacial speed. But not the "New FHA."

Though the first major Congressional overhaul of the Federal Housing Administration's mortgage insurance program in a decade has a long way to go in a short time, the agency is already thinking about how to implement the proposed changes, officials said. last week at the Mortgage Bankers Association's Government Housing Finance Conference here.

If lawmakers should allow the FHA to switch to risk-based pricing, as proposed in a House bill that is awaiting floor action, the agency would like to create a "little premium calculator" as a simple means of determining what FHA would charge to insure a particular loan, according to Meg Burns, director of FHA's Office of Single-Family Program Development.

The agency also plans to move condominiums into the standard 203(b) program to eliminate the "long, drawn-out" approval process, and to either completely revamp the Title I home improvement loan program or drop it altogether, Burns said at a recent conference on the government's housing finance programs.

But the question remains whether both the House and Senate, which has yet to hold hearings, can come to an agreement before members end what is expected to be an election-shortened session and go home. In other words, could some at the FHA be putting the proverbial cart before horse?

While the MBA has pointed out repeatedly that the clock is ticking, FHA Commissioner Brian Montgomery remains optimistic. "We have a real shot at modernization," he told the conference, which was sponsored by the Mortgage Bankers Association.

Montgomery said he was "encouraged" and "truly surprised" by bi-partisan support in the House, where 61 members have signed on to the bill which has been cleared by the House Finance Committee.

And he said he is "seeing growing enthusiasm in the Senate," where a bill is expected to be introduced this week and hearings could be held later this month.

Both conventional and subprime lenders have been steadily eating away at FHA's bread-and-butter market, which is low and moderate-income borrowers in general and first-time buyers in particular, and the agency's market share has dropped from 13 percent in 1990 to just 3.5 percent last year, Martha Simmons of SunTrust Mortgage and vice chair of the MBA's Residential Loan Committee, told the meeting.

"To be truly effective" and once again become a household name, Montgomery said, "we need to the flexibility to offer better products so borrowers can choose the one that suits them best."

And he is hoping the recent IRS Revenue Ruling that downpayment assistance providers are not non-profit corporations will give a shot in the arm to efforts to revamp the 74-year-old mortgage insurance program.

Noting that 25-30 percent of all FHA's volume is from loans in which the seller "donates" all or part of the downpayment through a third-party entity, the FHA Commissioner said he's "not sure what will fill the void" if Congress fails to give the FHA permission to back 100 percent mortgages.

While the ruling is "not a complete death knell" for downpayment assistance, he said, "it highlights the need" for lawmakers to move forward.

In her presentation, meanwhile, Burns said the premium calculator envisioned by her department would compute the cost of the insurance premium based on the borrower's credit score, the term of the mortgage and whether it has a fixed or adjustable rate, the loan-to-value ratio, and whether the loan is either a purchase-money mortgage or a refi.

The calculator would be available at FHA Connection, which provides approved lenders direct, secure, online access to the Department of Housing and Urban Development's computer systems, she said, or it could also be downloaded so lenders could incorporate it into their systems.

The calculator might even be made available to consumers on a free-standing website, she said

The plan for condos is to remove them from a "very onerous, time-consuming" clearance process by allowing lenders to certify condo loans directly based on a streamlined checklist.

Published: June 14, 2006

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.