Lost in the confusion that I caused last week ["He Said, She Said" Pipeline, May 27] by citing the dollar volume [of FHA loans insured] rather than focusing on the far more important statistic (homebuyers helped) is the fact that the FHA insured 33% more purchase transactions in the first quarter of 2010 than Fannie Mae and Freddie Mac combined.

This is not a one-time aberration. The FHA insured almost as many purchase loans as the two GSEs combined did in 2009 and insured more purchase loans than the GSEs did in the last 15 months (2009 and the first quarter of 2010). Moreover, the GSEs have telegraphed in their most recent 10-Qs that this gap [between the volume of loans they insure and the amount the FHA insures] is likely to widen unless they change their pricing policies.

As someone who has worked at the FHA and been around the FHA program for many years, it is truly remarkable that the agency, despite its lack of resources and years of neglect, has become the primary financing vehicle for home purchase transactions in our country. While it is good news for the FHA's finances that the program is attracting borrowers with excellent credit (57% had FICO scores over 680 in the first quarter of 2010), the implications for the housing recovery and the broader economy are not as encouraging.

As I noted in my May 5th article ["Two GSE Policies Hobble a Housing Recovery"], the Obama Administration is counting on Fannie Mae and Freddie Mac to be key players in the housing recovery. Unfortunately, as the FHA Commissioner noted in his speech on May 24th, it is clear that the housing market is not functioning properly even though we are almost three years removed from the collapse of the market in the Summer of 2007.

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