The Mortgage Bankers Association (MBA) has reacted to credit policy changes proposed by Federal Housing Administration (FHA) Commissioner David Stevens. The changes come in anticipation of FHA's annual actuarial study, due to be submitted in November, which is expected show that FHA's capital reserve ratio has dropped below the congressionally-mandated level of two percent. MBA's Chairman David G. Kittle, CMB issued the following statement: "FHA is playing a more important role than ever in today's housing market helping qualified first-time and traditionally underserved borrowers purchase a home. The steps that Commissioner Stevens announced today will help ensure that FHA remains viable for years to come. "It is important to note that FHA is not in financial trouble. It has been impacted by the housing market, just as most lenders and mortgage insurance companies have been. Today's announcement shows that FHA intends to take significant steps to strengthen its risk management processes and enhance its future financial stability." "We applaud FHA's goal of enhancing the management of its credit risk. Adding a chief risk officer is a logical step to better manage and mitigate risk to the FHA insurance fund. Additionally, ensuring fair and accurate appraisals will also help FHA better manage its risk. "Further, for several years, MBA has been advocating for higher net worth requirements for FHA lenders. It is important that lenders and brokers be made to have sufficient financial backing so they can be held accountable in the event of problem loans. At the same time, it is just as important that any new requirements be reasonable, and not unduly hamper competition. "We look forward to working with FHA officials to implement their proposed changes." For more information, visit www.mortgagebankers.org.