@techreport{NBERw15802,
 title = "Reassessing FHA Risk",
 author = "Diego Aragon and Andrew Caplin and Sumit Chopra and John V. Leahy and Yann LeCun and Marco Scoffier and Joseph Tracy",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "15802",
 year = "2010",
 month = "March",
 URL = "http://www.nber.org/papers/w15802",
 abstract = {Federal Housing Administration (FHA) insurance has doubled over the past two years and is projected to redouble to $1.5 trillion over the next five. Despite clear signs of strain in the FHA’s Mutual Mortgage Insurance Fund, a recent actuarial review indicates that the FHA will not need any form of government support. We identify four risk factors that make such a funding request more likely; the review underestimates how many FHA borrowers are underwater and in economic distress; it uses measures of house values that lower loss estimates; it does not incorporate early-warning signals of future losses that are available from mortgage delinquency; and it ignores potential risks associated with recent down-payment assistant programs despite higher losses on previous programs of this type. We propose measures that could be taken to improve the predictive accuracy of FHA risk assessment.},
}