Letter to the Editor: Brian D. Montgomery Responds to The Wall Street Journal’s “UWM Is a Government Mortgage Canary”
This letter to the editor was originally published in The Wall Street Journal on September 1, 2026.
Your editorial “UWM Is a Government Mortgage Canary” (Aug. 14) warrants a few elaborations regarding the Federal Housing Administration’s mortgage insurance program.
First, the FHA pays insurance claims from its Mutual Mortgage Insurance Fund, which is funded by mortgage insurance premiums paid by FHA borrowers and investment income. By statute, the FHA possesses permanent and indefinite budget authority with the U.S. Treasury and today has a buffer of $188 billion in capital between taxpayers and mortgage defaults.
Second, the current administration has addressed several problems with the system of borrower assistance with which you take issue. As you note, the prior administration’s adjustments to borrower assistance included extensions of Covid-era assistance and novel uses of what’s called the “partial claim,” a long-used method of assistance for eligible borrowers. Under an FHA partial claim, eligible mortgage arrearages are placed into a zero-interest subordinate lien. The lien generally doesn’t have to be repaid until the borrower sells the property, refinances the mortgage or otherwise triggers repayment.
For borrowers, this helps stave off foreclosure without requiring extra monthly payments. For the FHA, it can be considerably less expensive than allowing a seriously delinquent loan to proceed to foreclosure and paying a full insurance claim.
Partial claims were used extensively during the previous administration, driven in significant part by the pandemic. They also permitted borrowers who subsequently re-defaulted to receive additional assistance that resulted in a dramatic increase in the number of partial claims—now more than 1.7 million partial claims outstanding, which today presents challenges for borrowers and the FHA.
However, the current administration has changed that policy, requiring borrowers who need loss mitigation to satisfy a three-month trial payment period and placing tighter restrictions on how soon a borrower can receive another partial claim. Previously, borrowers could move quickly into a partial claim and return to current status for reporting purposes; today, a borrower participating in a trial payment plan remains classified as delinquent until the trial period is successfully completed.
None of this is an argument that the FHA should be indifferent to a specific lender’s origination practices. FHA staff routinely monitor loan performance to ensure stability and regularly take action against lenders with poor underwriting quality.
Nevertheless, keeping a creditworthy borrower in a home through a sustainable modification and resolving the arrearage through a subordinate lien can be dramatically less costly than allowing the loan to fail.
Brian D. Montgomery
Alexandria, Va.
Mr. Montgomery served as FHA commissioner from 2005-09 and 2018-20 and as Housing and Urban Development deputy secretary from 2019-21.
