MBA president fires back on claims of poor FHA underwriting

Bob Broeksmit, president and chief executive of the Mortgage Bankers Association (MBA), issued a forceful rebuttal to a Wall Street Journal op‑ed that linked United Wholesale Mortgage’s (UWM) recent $2.05 billion capital partnership with Oaktree Capital Management to the health of the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund (MMIF). The Journal’s piece, titled “UWM Is a Government Mortgage Canary,” argued that UWM’s capital infusion and its “risky mortgage bets” were endangering taxpayer‑backed FHA guarantees, citing that 21 percent of UWM’s FHA‑originated loans had become seriously delinquent within a year—nearly double the rate for its 2022‑2023 FHA portfolio. Broeksmit countered that the op‑ed erroneously conflated a single lender’s hedging misstep with program‑wide performance, emphasizing that the MMIF remains “exceedingly well‑capitalized” with an 11.47 percent capital ratio for fiscal 2025, roughly six times the statutory 2 percent minimum and marking the eleventh consecutive year the fund has exceeded that threshold.

Broeksmit’s response placed the recent rise in FHA delinquencies in the context of the orderly wind‑down of COVID‑19 forbearance programs rather than evidence of systemic distress. MBA data for the second quarter of 2026 showed that 11.79 percent of FHA borrowers were behind on payments, up 122 basis points from the prior year, and the seriously delinquent rate rose to 2.06 percent—still well below the 2.72 percent delinquency rate for conventional mortgages. He argued that these elevated figures reflect a natural post‑forbearance normalization and do not threaten the MMIF’s solvency. Supporting this view, mortgage consultant Rick Sharga noted that higher delinquency rates are tied more to revised loss‑mitigation policies and the inherent characteristics of FHA borrowers—lower down payments, higher debt‑to‑income ratios, and thinner equity cushions—rather than to reckless underwriting by lenders such as UWM.

The broader debate underscores the growing dominance of independent mortgage banks (IMBs) in the U.S. housing market, with IMBs accounting for 84 percent of single‑family originations in 2025 and holding a 90 percent share of the FHA market, up from 57 percent in 2010. While the Journal warned that rising FHA stress could signal problems in the conventional market, Broeksmit warned that attributing the MMIF’s health to one lender’s capital strategy misleads readers and distracts from the fund’s robust capital position. The exchange highlights ongoing concerns about moral hazard in non‑bank mortgage origination and suggests that policymakers and industry observers will continue to scrutinize the interplay between lender behavior, FHA underwriting standards, and taxpayer exposure as the sector adjusts to post‑pandemic realities.

⚡ Effects Interpreter