HUD: FHA Annual Report to Congress

Investor Update
November 15, 2017

Capital Reserves remain above statutory minimum for third straight year

WASHINGTON – The Federal Housing Administration (FHA) today released its 2017 Annual Report to Congress on the economic condition of the agency’s Mutual Mortgage Insurance Fund (MMI Fund). FHA reports that at the end FY 2017, the MMI Fund had a total economic net worth of $25.6 billion and the Capital Ratio that remains above the statutory minimum for a third straight year.

The MMI Fund supports FHA’s Single Family mortgage insurance programs, including all forward purchase and refinance transactions, as well as mortgages insured under the Home Equity Conversion Mortgage (HECM) or reverse mortgage program originated since FY 2009. While the MMI Fund remains above its minimum capital level, both the economic net worth and the capital ratio of the MMI Fund declined from levels reported last year. The Fund’s economic net worth fell $1.9 billion and the capital ratio declined from 2.35 to 2.09 percent from FY 2016.

“The fiscal health of FHA demands our constant attention and vigilance to ensure we can continue providing sustainable homeownership opportunities to working families without exposing taxpayers to excessive risk,” said U.S. Housing and Urban Development Secretary Ben Carson. “Our duty is clear—we must make certain FHA remains financially viable so future generations can build wealth and climb the economic ladder of success.”

This year’s report reflects a transition toward providing more transparency, consistency, and accountability, supporting FHA’s commitment to enhanced disclosure on the financial condition and sustainability of its Single Family mortgage insurance programs. For example, FHA is providing stand-alone capital ratios for its forward and reverse mortgage programs to better assess the impact of each on the MMI Fund. In addition, FHA is providing new data and analysis into the economic drivers impacting the performance of the MMI Fund, including stress-testing of the portfolio based on historical scenarios.


  • The Fund’s FY 2017 Capital Ratio is 2.09 percent, a decrease from 2.35 percent in FY 2016.  This is the third consecutive year this ratio exceeded the statutory minimum of 2.00 percent.
  • The MMI Fund’s Economic Net Worth for FY 2017 is $25.6 billion, down from $27.6 billion for FY 2016.  Economic Net Worth is comprised of Total Capital Resources of $39.7 billion and a negative Cash Flow NPV of $14.1 billion.  Economic Net Worth declined by $1.9 billion from FY 2016.
  • FHA’s cumulative Insurance-in-Force (IIF) reached approximately $1.23 trillion at the end of FY 2017, an increase of 4.8 percent from FY 2016.
  • FHA endorsed 1,246,440 forward mortgages in FY 2017 (including 882,079 purchase loans) totaling $251 billion in Unpaid Principal Balance (UPB). 
  • First-time homebuyers accounted for 725,102 or 82.2 percent of all FHA forward purchase loans. 
  • The average loan amount of FHA-insured forward mortgages was $201,337.
  • The average borrower’s credit score was 676 compared to 680 in FY 2016.


FHA maintains resources to cover both future claims, as well as an additional statutorily-required capital cushion of 2.0 percent of all Insurance-in-Force (IFF).  This ‘Capital Ratio’ is calculated by dividing the Fund’s Economic Net Worth ($25.6 billion in FY 2017) by total IFF of approximately $1.23 trillion. As noted above, the FY 2017 Capital Ratio of the Fund is 2.09 percent, a slight decline from the end of FY 2016 when the Capital Ratio was 2.35 percent.

FHA believes that properly evaluating future policy decisions, such as adjustments to mortgage insurance premium rates and overall risk tolerance for the Single Family portfolio, requires assessing capital adequacy across a range of economic scenarios. This year’s Annual Report includes new and refined stress tests of the FHA portfolio, providing insight on the MMI Fund’s Capital Ratio under 100 historical economic scenarios, including highly stressful periods in the housing market.

This year’s report includes new stand-alone estimates of the capital resources and capital ratios for insured forward and Home Equity Conversion Mortgages (HECMs). This new reporting more accurately reflects the combined contributions of each program for the first time since HECMs became part of the MMI Fund in FY 2009.

The 2017 Annual Report finds the fiscal condition of FHA’s forward mortgage portfolio is materially better than the HECM portfolio. Excluding HECMs, FHA’s FY 2017 forward mortgages have a capital ratio of 3.33 percent, well above what Congress requires. FHA’s forward mortgages in FY 2017 have a positive economic net worth of $38.4 billion, contributing $4.2 billion to the Fund. By contrast, the 2017 HECM portfolio has a negative capital ratio of 19.84 percent and a negative economic net worth of $14.5 billion. FHA took several actions earlier this year to stabilize the HECM program, changes that will be reflected in next year’s annual report.


Immediately upon taking office, the Trump Administration indefinitely suspended a scheduled reduction in FHA’s annual forward mortgage insurance premiums as the agency assessed the economic impact on the MMI Fund. The 2017 Annual Report concludes that had this premium reduction taken effect in January, the MMI Fund’s Capital Ratio would have fallen to 1.76 percent (below the statutory minimum) resulting from a net reduction in cash flows of $3.2 billion and an increase in IIF of $45 billion.


FHA’s Home Equity Conversion Mortgage (HECM), or reverse mortgage program, continues to serve eligible seniors, 62 years and older, with a financing option that can help them remain in their home and age in place. As previously noted, the HECM portfolio has been a substantial economic drain on the MMI Fund. To place this program on a more fiscally sustainable path, FHA recently implemented a set of changes to mortgage insurance premiums, Principal Limit Factors (PLFs) and certain servicing requirements beginning in FY 2018. The impact of these changes on new endorsements, and the ongoing performance of the currently outstanding HECM portfolio, will continue to be closely monitored and managed by FHA.  The 2017 Annual Report finds:

  • HECM endorsements grew 13.1 percent since last year, with 55,291 new mortgages endorsed.  The Maximum Claim Amount (MCA) of FY 2017 endorsements totaled $17.7 billion, a 20.3 percent increase over FY 2016. 
  • HECM claims continued to increase in FY 2017, rising to $5.0 billion, up from the $4.2 billion in claims paid in FY 2016. As a result, HECM’s net cash flow was negative 5.07 percent of HECM average Insurance-in-Force during FY 2017.


Pinnacle Actuarial Resources, Inc. (Pinnacle) served as the independent actuary for FY 2017. By serving as a critical check on the results, an independent actuarial review remains an integral part of the Annual Report process. Pinnacle’s independent actuarial review reports for forward mortgages and HECM, confirming that the estimates used in the FY 2017 Annual Report to calculate the capital ratio are reasonable, are contained in the Annual Report.

Source: HUD



Alan Jaffa

Alan Jaffa is the chief executive officer for Safeguard, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to chief operating officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur of the Year® finalist in 2013.


Chief Operating Officer

Michael Greenbaum

Michael Greenbaum is the chief operating officer for Safeguard. Mike has been instrumental in aligning operations to become more efficient, effective, and compliant with our ever-changing industry requirements. Mike has a proven track record of excellence, partnership and collaboration at Safeguard. Under Mike’s leadership, all operational departments of Safeguard have reviewed, updated and enhanced their business processes to maximize efficiency and improve quality control.

Mike joined Safeguard in July 2010 as vice president of REO and has continued to take on additional duties and responsibilities within the organization, including the role of vice president of operations in 2013 and then COO in 2015.

Mike built his business career in supply-chain management, operations, finance and marketing. He has held senior management and executive positions with Erico, a manufacturing company in Solon, Ohio; Accel, Inc., a packaging company in Lewis Center, Ohio; and McMaster-Carr, an industrial supply company in Aurora, Ohio.

Before entering the business world, Mike served in the U.S. Army, Ordinance Branch, and specialized in supply chain management. He is a distinguished graduate of West Point (U.S. Military Academy), where he majored in quantitative economics.



Sean Reddington

Sean Reddington is the new Chief Information Officer for Safeguard Properties LLC. Sean has over 15+ years of experience in Information Services Management with a strong focus on Product and Application Management. Sean is responsible for Safeguard’s technological direction, including planning, implementation and maintaining all operational systems

Sean has a proven record of accomplishment for increasing operational efficiencies, improving customer service levels, and implementing and maintaining IT initiatives to support successful business processes.  He has provided the vision and dedicated leadership for key technologies for Fortune 100 companies, and nationally recognized consulting firms including enterprise system architecture, security, desktop and database management systems. Sean possesses strong functional and system knowledge of information security, systems and software, contracts management, budgeting, human resources and legal and related regulatory compliance.

Sean joined Safeguard Properties LLC from RenPSG Inc. which is a nationally leading Philintropic Software Platform in the Fintech space. He oversaw the organization’s technological direction including planning, implementing and maintaining the best practices that align with all corporate functions. He also provided day-to-day technology operations, enterprise security, information risk and vulnerability management, audit and compliance, security awareness and training.

Prior to RenPSG, Sean worked for DMI Consulting as a Client Success Director where he guided the delivery in a multibillion-dollar Fortune 500 enterprise client account. He was responsible for all project deliveries in terms of quality, budget and timeliness and led the team to coordinate development and definition of project scope and limitations. Sean also worked for KPMG Consulting in their Microsoft Practice and Technicolor’s Ebusiness Division where he had responsibility for application development, maintenance, and support.

Sean is a graduate of Rutgers University with a Bachelor of Arts and received his Masters in International Business from Central Michigan University. He was also a commissioned officer in the United States Air Force prior to his career in the business world.


General Counsel and Executive Vice President

Linda Erkkila, Esq.

Linda Erkkila is the general counsel and executive vice president for Safeguard and oversees the legal, human resources, training, and compliance departments. Linda’s responsibilities cover regulatory issues that impact Safeguard’s operations, risk mitigation, enterprise strategic planning, human resources and training initiatives, compliance, litigation and claims management, and mergers, acquisition and joint ventures.

Linda assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. Her practice spans over 20 years, and Linda’s experience covers regulatory disclosure, corporate governance compliance, risk assessment, executive compensation, litigation management, and merger and acquisition activity. Her experience at a former Fortune 500 financial institution during the subprime crisis helped develop Linda’s pro-active approach to change management during periods of heightened regulatory scrutiny.

Linda previously served as vice president and attorney for National City Corporation, as securities and corporate governance counsel for Agilysys Inc., and as an associate at Thompson Hine LLP. She earned her JD at Cleveland-Marshall College of Law. Linda holds a degree in economics from Miami University and an MBA. In 2017, Linda was named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.


Chief Financial Officer

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard. Joe is responsible for the Control, Quality Assurance, Business Development, Accounting & Information Security departments, and is a Managing Director of SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Joe has been in a wide variety of roles in finance, supply chain management, information systems development, and sales and marketing. His career includes senior positions with McMaster-Carr Supply Company, Newell/Rubbermaid, and Procter and Gamble.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.


AVP, High Risk and Investor Compliance

Steve Meyer

Steve Meyer is the assistant vice president of high risk and investor compliance for Safeguard. In this role, Steve is responsible for managing our clients’ conveyance processes, Safeguard’s investor compliance team and developing our working relationships with cities and municipalities around the country. He also works directly with our clients in our many outreach efforts and he represents Safeguard at a number of industry conferences each year.

Steve joined Safeguard in 1998 as manager over the hazard claims team. He was instrumental in the development and creation of policies, procedures and operating protocol. Under Steve’s leadership, the department became one of the largest within Safeguard. In 2002, he assumed responsibility for the newly-formed high risk department, once again building its success. Steve was promoted to director over these two areas in 2007, and he was promoted to assistant vice president in 2012.

Prior to joining Safeguard, Steve spent 10 years within the insurance industry, holding a number of positions including multi-line property adjuster, branch claims supervisor, and multi-line and subrogation/litigation supervisor. Steve is a graduate of Grove City College.


AVP, Operations

Jennifer Jozity

Jennifer Jozity is the assistant vice president of operations, overseeing inspections, REO and property preservation for Safeguard. Jen ensures quality work is performed in the field and internally, to meet and exceed our clients’ expectations. Jen has demonstrated the ability to deliver consistent results in order audit and order management.  She will build upon these strengths in order to deliver this level of excellence in both REO and property preservation operations.

Jen joined Safeguard in 1997 and was promoted to director of inspections operations in 2009 and assistant vice president of inspections operations in 2012.

She graduated from Cleveland State University with a degree in business.


AVP, Finance

Jennifer Anspach

Jennifer Anspach is the assistant vice president of finance for Safeguard. She is responsible for the company’s national workforce of approximately 1,000 employees. She manages recruitment strategies, employee relations, training, personnel policies, retention, payroll and benefits programs. Additionally, Jennifer has oversight of the accounts receivable and loss functions formerly within the accounting department.

Jennifer joined the company in April 2009 as a manager of accounting and finance and a year later was promoted to director. She was named AVP of human capital in 2014. Prior to joining Safeguard, she held several management positions at OfficeMax and InkStop in both operations and finance.

Jennifer is a graduate of Youngstown State University. She was named a Crain’s Cleveland Business Archer Award finalist for HR Executive of the Year in 2017.


AVP, Application Architecture

Rick Moran

Rick Moran is the assistant vice president of application architecture for Safeguard. Rick is responsible for evolving the Safeguard IT systems. He leads the design of Safeguard’s enterprise application architecture. This includes Safeguard’s real-time integration with other systems, vendors and clients; the future upgrade roadmap for systems; and standards designed to meet availability, security, performance and goals.

Rick has been with Safeguard since 2011. During that time, he has led the system upgrades necessary to support Safeguard’s growth. In addition, Rick’s team has designed and implemented several innovative systems.

Prior to joining Safeguard, Rick was director of enterprise architecture at Revol Wireless, a privately held CDMA Wireless provider in Ohio and Indiana, and operated his own consulting firm providing services to the manufacturing, telecommunications, and energy sectors.


AVP, Technology Infrastructure and Cloud Services

Steve Machovina

Steve Machovina is the assistant vice president of technology infrastructure and cloud services for Safeguard. He is responsible for the overall management and design of Safeguard’s hybrid cloud infrastructure. He manages all technology engineering staff who support data centers, telecommunications, network, servers, storage, service monitoring, and disaster recovery.

Steve joined Safeguard in November 2013 as director of information technology operations.

Prior to joining Safeguard, Steve was vice president of information technology at Revol Wireless, a privately held wireless provider in Ohio and Indiana. He also held management positions with Northcoast PCS and Corecomm Communications, and spent nine years as a Coast Guard officer and pilot.

Steve holds a BBA in management information systems from Kent State University in Ohio and an MBA from Wayne State University in Michigan.


Assistant Vice president of Application Development

Steve Goberish

Steve Goberish, is the assistant vice president of application development for Safeguard. He is responsible for the maintenance and evolution of Safeguard’s vendor systems ensuring high-availability, security and scalability while advancing the vendor products’ capabilities and enhancing the vendor experience.

Prior to joining Safeguard, Steve was a senior technical architect and development manager at First American Title Insurance, a publicly held title insurance provider based in southern California, in addition to managing and developing applications in multiple sectors from insurance to VOIP.

Steve has a bachelor’s degree from Kent State University in Ohio.