Federal Panel Advises Against Selling of FHA

A presidential task force today advised the Reagan Administration against selling its popular Federal Housing Administration, the agency that provides home mortgage insurance for millions of Americans.

“An outright sale of FHA would not attract buyers at a price government would find adequate, and without the ability to apply federal backing, the FHA would lose significant market appeal,” said Samuel Pierce, the secretary of the Department of Housing and Urban Development.

The task force, established after President Reagan called a year ago for the privatization of as much government as possible, said it could not demonstrate that there would be a willing buyer or an attractive sales price for FHA.

6 Million Loans Out

FHA insured approximately $47 billion worth of newly originated family mortgages in fiscal 1986, with about $224 billion FHA-insured mortgages on 6 million properties outstanding at the end of fiscal 1986.

FHA was established in 1935 at the height of the Great Depression when private mortgage insurance collapsed. Since its creation, it has insured a total of $431 billion in mortgages and provided homeownership assistance to 54 million households.

Since the reappearance of the private mortgage insurance industry in 1957, concerns have been raised about overlap and possible competition with the private sector by the government.