A group of three national housing associations believe the Federal program that insures mortgages was fundamentally sound and could continue to insure mortgages for home purchases.
However, the three groups, which represent real estate agents, mortgage bankers and home builders, said they expect high mortgage defaults again this year.The congressional General Accounting Office last week said that an independent audit of the Federal Housing Administration, which is part of the Department of Housing and Urban Development, had lost a record $4.2 billion in fiscal 1988.
The National Association of Realtors, the National Home Builders Association and the Mortgage Bankers Association held a news conference to reassure home owners that the federal insurance program was secure.
"We would anticipate relatively high levels of defaults for 1988 and 1989. It is cresting. It is starting to decline," Steven Dreissler of the National Association of Realtors said.
The groups agreed that the Department of Housing and Urban Development had not compiled good information to allow a thorough accounting of the Federal Housing Administration.
The General Accounting Office said the Federal Housing Administration's funds sustained heavy losses in 1988 due to economic declines in oil producing states and the Rocky Mountain areas and due to mismanagement at HUD. It is to report on the soundness of the housing administration's funds in November.
The Federal Home Mortgage Insurance program provides government mortgage insurance on homes for low- to middle-income buyers of homes costing up to $101,250. It also insures mortgages on apartment buildings, commercial properties and hospitals.
The housing administration's fund for single family home buyers lost $1.4 billion in 1988 but still had a balance of nearly $2.0 billion.
The trade associations said that the problems were mainly in the multifamily mortgage insurance fund not the private home mortgage insurance fund.
They have asked Congress to raise the mortgage limit on homes insured by the fund. They said the mortgage limit is too low to help many of the higher-priced areas of the country and has forced the program into the market of lower-priced homes where the risk of default is greatest.