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FHA Wants Input On Smaller-Balance Mortgages

David Krechevsky
Oct 05, 2022

Agency seeks industry input as a starting point to encourage greater origination of small-balance mortgages for FHA insurance.

The Federal Housing Administration (FHA) on Tuesday published a Request for Information (RFI) in the Federal Register seeking input on ways it can facilitate increased access to smaller balance mortgages through its single-family mortgage insurance programs. 

The agency said the RFI will assist as it explores opportunities to offer safe and sustainable mortgage credit to aspiring homeowners who live where houses may be less expensive.

In its 2022-26 Strategic Plan, the U.S. Department of Housing and Urban Development established strategic goals to “Support Underserved Communities” and to “Promote Homeownership.” Among the goal of supporting underserved communities is to advance housing justice and proactively strengthen and protect vulnerable and underserved communities.

“The input we receive through this RFI will help us better understand how FHA can make small mortgages more broadly available and affordable for those who need them,” said Federal Housing Commissioner Julia Gordon. “The RFI responses will help drive our programmatic work to increase access to homeownership and to close the racial homeownership gap.”

Specifically, the RFI asks questions concerning:

  • the current availability of small mortgage financing, 
  • barriers and disincentives to small mortgage lending transactions, 
  • changes to policies or processes that would encourage origination of more FHA-insured small balance mortgages, and 
  • considerations regarding liquidity provided through securitization.

Comments are requested to be submitted on or before Dec. 5, 2022. Late-filed comments will be considered to the extent practicable, the FHA said.

Instructions for submitting comments, which are requested by December 5, 2022, can be found in the RFI here.

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