The Federal Housing Administration has played a fundamental role in helping stabilize the nation's housing market, and recovery appears to be on track. However, FHA reform is critical for keeping the momentum going.

That's according to David H. Stevens, assistant secretary of the U.S. Department of Housing and Urban Development and FHA commissioner, who spoke to several thousand REALTORS® at a special three-day real estate summit, REALTORS® on the Rise: Stabilizing the U.S. Mortgage Finance Delivery System.

The event is being held May 11-13 as part of the REALTORS® Midyear Legislative Meetings & Trade Expo in Washington. D.C.

Recovery In Process, But Challenges Remain

Stevens credited increased home buyer demand, brought about by the home buyer tax credits, and the federal government's purchase of mortgage-backed securities for helping restore consumer confidence and get the economy moving.

Home prices and sales are beginning to recover, inventories are down, private capital is beginning to re-emerge, investor confidence is coming back, and the job market is showing signs of improvement. These all show renewed confidence in the housing market. We need to finish the job now and make the housing recovery sustainable and keep the economy on the right track, Stevens said.

Despite the signs of improving stability, Stevens said that the housing market continues to face challenges, mainly from unemployment and home owners with negative equity. These issues need to be dealt with responsibly, we need solutions to help the most severely distressed home owners-those most in need and at risk-and when we can't help them we need to make the transition as smooth as possible.

Help for Distressed Borrowers

According to Stevens, helping underwater borrowers is critical to stemming the tide of foreclosures, and recently announced revisions to FHA and the Home Affordable Modification Program will help stabilize home prices and keep more people in their homes.

FHA refinances will help home owners write down principal balances or modify and restructure loans into safer, sustainable products. Changes to the HAMP program include a forbearance, or temporary assistance, for unemployed home owners while they look for work.

'Program Is At Risk'

Stevens said FHA continues to play a pivotal role in housing recovery and re-emphasized that reform is critical. After the housing market crashed, FHA had to step in to play a vital role. Over the past three years, FHA reacted by increasing its market share dramatically. There would be no housing market recovery without FHA; however, the program is at risk. We cannot continue to operate under the current construct if we don't shore up its fiscal situation. We need to make FHA stronger, said Stevens.

Stevens asked REALTORS® to lend their support for the passage of H.R. 5072, the FHA Reform Act of 2010, which would allow FHA to hold lenders accountable for the loans they underwrite and originate, and give FHA the flexibility to respond to changes in the marketplace by granting additional authority to adjust the annual mortgage insurance premium and reduce borrowers' upfront mortgage insurance premiums.

Adopting these changes during the current fiscal year would replenish FHA's capital reserves and strengthen its financial position, Stevens said.

Stevens ended the session by reaffirming his commitment to continue working with REALTORS® to fully rebuild the housing market. REALTORS® know the community better than anyone else; indeed, there is no group in America that better understands homeownership, said Stevens.

More than 7,000 REALTORS® are expected to attend the REALTORS® Midyear Legislative Meetings & Trade Expo. During the week, they will also meet with legislators on Capitol Hill to urge action toward stabilizing the U.S. mortgage finance delivery system, strengthening housing stability, and improving liquidity for the commercial real estate market.

For more information about the REALTORS® Midyear Legislative Meetings & Trade Expo, visit Or get a taste of the action at the Midyear blog,