By Alan Fein

(AXcess News) New York - Federal Housing Administration commissioner David Stevens said Friday that the FHA was close to being below capital standards for the first time in 75 years, insisting that it would not need a bailout.

The ripple effect of the housing collapse is hitting home at the federal insurer of home loans with 17% of borrowers delinquent or in foreclosure compared to 13% for all loans.  Stevens told reporters that taxpayers would not have to rescue the FHA.

"Under no circumstance will any taxpayer bailout be needed," said Stevens.  The FHA Commissioner insisted that borrower fees would not be increased, nor would the number of loans it insured be reduced.  So without raising fees, or cutting back on the number of home loans the FHA would insure, Stevens gave no logical answer as to how the Federal Housing Administration would get its financial cushion back to mandatory minimum levels without changing its loan insurance terms.

One area the FHA is examining is loan appraisals for homes under construction.  Now they're good for 12 months, but its going to be changed to 4.  FHA lender requirements are also being changed.  Currently, lenders only need $250,000 in net capital.  Under the proposed rules change, that figure will rise to $1 million.   Refinancing FHA loan will also require new income verification and quality control checks and a maximum loan amount will be 125% of the value of the home, which some say is too high.

The FHA czar is also going to bring on board a chief risk officer for the first time in the Federal Housing Administration's history, sort of like an overseer of loan apps at a mortgage underwriter.

The National Association of Realtors (NAR) President Charles McMillan said in a statement on July 30, 2009, "Until foreclosures have been significantly reduced and housing inventory reaches a more normal level, there can be no true housing recovery. The FHA–HAMP program will go a long way in achieving these important goals by helping FHA servicers bring mortgages current, buy down loans by up to 30 percent of the unpaid principal balance, and defer these amounts until the first mortgage is paid off."

Still, NAR is lobbying Washington hard to induce Congress into extending the first-time homebuyer tax credit to include anyone who buys a home.  But at this point, Realtors will settle for an extension of the tax-credit program as it stands now.