We’ve all heard stories about second-team players that were thrust into the starting lineup because the usual starters were not healthy enough to play — or whose past performance did not merit a starting role.

The same was true for the Federal Housing Administration in 2011. It became the preferred default setting in the United States mortgage banking system — again — by default.

Just before Thanksgiving, when U.S. lawmakers moved to increase the maximum size of loans that can be guaranteed by the Federal Housing Administration, the message sent by Congress was that it would rather rely on an agency it more likely could control than two (Fannie Mae and Freddie Mac) that have not performed up to expectations.

Why promote two players whose playing time you wanted to reduce — or which you might want to cut from the team entirely?

A spending bill passed by Congress restored to $729,750 the maximum size of a mortgage that can be backed by the FHA, which insures loans to buyers with down payments as low as 3.5 percent.

While the move pacifies the huge lobbying efforts of the National Association of Realtors and the National Association of Home Builders who called for more incentives to lure homebuyers, it also puts additional pressure on an agency that was never designed to shoulder such a load.

"FHA was built as a backstop, not a primary field," said Brian Montgomery, former FHA commissioner who is now a partner at the Collingwood Group LLC, a business consulting firm. "When I came in 2005, FHA had about 3.5 percent of the forward market. Now, it has upward of 30 percent of the market, plus the HECM, and basically the same number of employees."

The HECM, or Home Equity Conversion Mortgage, is the nation’s most popular reverse mortgage program and insures more than 85 percent of all reverse mortgages.

The bottom line is that Congress did not want to do anything to promote, enhance or support Fannie and Freddie, two government-sponsored enterprises (GSEs) created to make mortgage funds more available and affordable for U.S. borrowers. With so many members of Congress now questioning the government’s role in housing, coupled with the huge losses sustained by Fannie and Freddie, legislators were unwilling to change how the GSEs set their maximum loan ceilings.

In a nutshell, Congress threw the housing industry a bone by reinstating higher FHA limits but attempted to show its displeasure by keeping its two biggest players on the bench.

According to a formula established by the Housing and Economic Recovery Act of 2008 (HERA), loan-limit changes for Fannie and Freddie are based on average price increases or decreases from one October to the next. There is a benchmark number to protect a downside slide, limiting the actual "floor" amount while providing for a rising ceiling. Since the Federal Housing Finance Agency found that prices declined just about everywhere, the national ceiling was left unchanged.

Ironically, it used to be the other way around. Fannie and Freddie were the darlings of all things mortgage and FHA was viewed as the problem child (investigations of former HUD secretaries, and allegations that some programs were labeled "inept, detrimental and costly" by the Office of Inspector General).

Periodically, some members of Congress wanted to see the Federal Housing Administration taken out of the Department of Housing and Urban Development and put into the private sector. For years, "government housing" options — specifically FHA loans — were perceived only as being problematic and heavily wrapped in red tape.

Three years ago, when money was tight and jumbo mortgages became so difficult to find, FHA became a sort of safety valve for many mortgage brokers. Some lenders reported that FHA loans made up nearly 40 percent of their business, nearly double the volume of the past five years combined.

The government’s answer was to balance the problem by giving lenders more money so that they could lend it back to consumers and small businesses. The cash never really came back in a way it was designed.

So, late this year, FHA was again named to be the ultimate team player — providing more first mortgages, reverse mortgages, purchase-rehab loans — while waiting to see if it will ever get help from its fading stars or possibly new players in the private sector.

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