The FHA needs to be better able to compete in today's marketplace and it needs access to the best risk-management tools available when managing the risks to the government. 4. Protecting the taxpayer  Any government-insured mortgage offered under a refinancing program needs to be prudently underwritten, regardless of whether a principal write-down is part of the deal.
First and foremost, this means establishing a meaningful amount of homeowner equity. Second, it means using sound underwriting criteria to ensure that borrowers are reasonably likely to be able to repay the government-insured loan on a sustained basis.