Outgoing Frank Cassidy on running FHA more like a business

Frank Cassidy’s tenure as Federal Housing Administration (FHA) Commissioner and Assistant Secretary for Housing in the U.S. Department of Housing and Urban Development (HUD) was brief but eventful, he told HousingWire.   

“The one thing I learned about the government and the FHA is that it’s set up to be like a big cruise ship — it goes straight and slow, and it’s hard to move left, hard to move right,” Cassidy said. “Single-family mortgages have always been the priority, because that makes up 80% to 90% of the FHA’s portfolio.”

Looking ahead, Cassidy remains focused on the housing landscape, expressing excitement for the pending FC: When people buy a home, they should have some skin in the game, whether it be 1%, 3%, 4%, or 5%. Having skin in the game is an important part. I understand there are studies that say it’s not riskier, but I think when somebody saves up, builds that cash reserve, and goes to buy a house, they have a feeling that they have skin in the game, which is what is important. They feel like, ‘I bought this, I did this.’

FN: HUD recently issued a request for information on changes to the HECM and HMBS reverse mortgage programs. What may come out of that?

FC: When I first started in the position, I didn’t really know a lot about reverse mortgages, but I did get coached up quite a bit, and it’s an important program. Seniors sit on $10 trillion of equity in their homes that a reverse mortgage allows them to tap into. And by the way, they don’t have to make any payments when they get the mortgage; the interest just accrues. So, it’s definitely a program that serves a need in the market and is important to seniors. I would like to see efficiencies created in the reverse mortgage space.

FN: How much of a priority is the reverse mortgage space for the agency right now?

FC: Well, you can only get so much done. The government moves slowly. The one thing I learned about the government and the FHA is that it’s set up to be like a big cruise ship — it goes straight and slow, and it’s hard to move left, hard to move right. Now, fortunately, I was able to bring that private-sector spirit to the FHA and get a lot done in the first year, but it’s all about priorities. You have to prioritize initiatives. Single-family mortgages have always been the priority, because that makes up 80% to 90% of the FHA’s portfolio.

FN: As you transition out of the administration, what are your immediate plans in the private sector?

FC: I’m planning on returning to the private sector, to the commercial mortgage banking origination world that I come from. However, I’d like to use my voice to support President Trump and his initiatives as they relate to housing. The The FHA really plays a countercyclical role in the market. When rates are higher and capital is less available, the FHA, as well as Fannie and Freddie, tend to step up. We’re in a good place right now in the market. It’s obviously harder to get deals done in a higher interest rate environment, but that’s part of real estate, and as part of the housing finance system, it very much goes in cycles.

FN: What are your thoughts on Bill Pulte stepping into the