The nation's new housing commissioner has a message for the mortgage industry: Federal Housing Administration (FHA) insurance guarantees are falling – and that's a good thing.

Speaking at the Mortgage Bankers Association's annual servicing show in Florida Wednesday morning, acting FHA chief Carol Galante said endorsements should fall to just $150 billion in fiscal 2013 – less than half of what the agency insured in its peak year of 2009 when the housing market stared into an abyss of tight credit and declining home prices.

In fiscal year 2011, which ended this past September, FHA guarantees slipped to $236 billion. The slippage has allowed private MI firms to gain business.

Galante also warned that, "The forecast projection is showing that we will need to tap into permanent funds to meet 30-year losses on current books of business.”

The FHA mutual mortgage insurance (MMI) fund is barely in the black – but guarantees a $1 trillion book of business.

If not for recent legal settlements with Bank of America and other seller/servicers, the MMI would be in the red and would need to tap a line of credit with the Treasury.

Although FHA is facing steep losses in the next two years, Galante said the fund has roughly $30 billion in capital to cover its problem loans.

She noted that FHA loans written before 2009 were "battered" due to the economy, unemployment and depreciating property values. However, she said, FHA's loan portfolio over the past three years is the "best book of business” the agency has ever seen.

"We will continue to build upon this because it is a significant economic engine for FHA moving forward,” she said. 

-Paul Muolo also contributed to this report

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