Officials responsible for mortgages that are directly government-backed weighed in on how they're looking to address borrower affordability and performance risk amid policy change at the Mortgage Bankers Association's servicing conference.

Federal Housing Administration Commissioner Frank Cassidy called his agency's insurance-fund capital ratio "very strong" and hinted that a premium cut or other move advantageous to affordability could be considered long-term but did not explicitly mention one.

"We're constantly monitoring what the ratio could look like in the next couple years, balancing that with the policy decisions we want to make to ultimately expand the mission," Cassidy told attendees at the event in Dallas.

While delinquencies can hurt the fund, Cassidy indicated an increase in arrears that recently surfaced due to a transition away from pandemic borrower relief are temporary, and the change itself benefits the fund.

"We revised our loss mitigation waterfall, which should save the FHA insurance fund $2 billion over the next 10 years or so," Cassidy said.

Plans for further streamlining at FHA

The agency remains focused on other expense-saving procedural initiatives, he said.

"There's been so much bureaucratic red tape that has been put in place over the years, and we're focused on identifying areas within all FHA loan programs where we can pull that back so that ultimately doing business with FHA is easier and more streamlined," Cassidy said.

After Owen Lee, the panel's moderator, MBA's chairman-elect and CEO of Success Mortgage Partners, asked whether long-sought acceleration in servicer reimbursement could be included in that equation, Cassidy said FHA does want to extend more efficiencies to the industry.

"We want to make it easier for FHA lenders to service FHA, so we are having those conversations daily with our team and looking at ways that we can achieve that goal while ultimately balancing the fact that we want to be good stewards of the program," Cassidy said.

Ginnie Mae's plans for 2026

Meanwhile, Ginnie Mae President Joe Gormley said he is going to be looking more closely at counterparties and how advancing for higher arrears could impact them. 

Other priorities this year include further improvement in liquidation reporting, and other data that could potentially improve the investor interest in securitized mortgages in ways that lower borrower rates.

He also confirmed that Ginnie plans to speed up its loan-level MBS overhaul with a goal to work through the third quarter on what he called the "assessment phase" of the long-term project.

"We're assessing the policy framework, we're assessing the legal framework, figuring out all the changes we need to make to allow those loan level transfers," he said.

The status of the pending VA partial claim

The Department of Veterans Affairs is in the process of making the VA partial claim available, but it doesn't have a date set for implementation yet, said Patrick Zondervan, executive director, loan guaranty service.

"We are currently developing policy, and once we have the opportunity to brief our congressional members, we look forward to engaging with the industry," he said. "That's coming real soon, but that's all I can share," he said.