An op-ed published earlier this month by The Wall Street Journal has raised the eyebrows of at least one mortgage industry leader, who penned a rebuttal this week about the outlet tying a capital infusion at United Wholesale Mortgage (UWM) to the health of the Federal Housing Administration (FHA)’s mortgage insurance fund.
On Aug. 13, the Journal’s editorial board published a piece titled, “UWM Is a Government Mortgage Canary,” in which the authors argued that the “struggling lender has used FHA taxpayer guarantees to make risky mortgage bets.”
Bob Broeksmit, the president and CEO of the Mortgage Bankers Association (MBA), issued a response to the article that the Journal published Friday. Broeksmit said the op-ed erroneously linked the health of an independent lender to the health of the FHA’s Mutual Mortgage Insurance Fund (MMIF).
‘Getting rich’ from risky loans
In the op-ed published two weeks ago, the Journal’s editorial board argued that UWM president CEO Mat Ishbia‘s decision to sign a strategic capital partnership agreement with Oaktree Capital Management came at a time when the leader of the nation’s largest mortgage lender was already “getting rich from making risky mortgages backed by taxpayers.”
The Journal pointed to FHA data showing that 21% of UWM’s loans in that channel over the past two years had become “seriously delinquent” within 12 months of origination — nearly double the rate for its FHA loans in 2022 and 2023. And it claimed that several lenders have even higher late-payment rates among recent FHA vintages, saying that the stress in the FHA book “could signal problems” in the conventional mortgage market too.
The op-ed went on to say that “this lending system invites moral hazard, as non-banks make money by originating more mortgages” and that if “a borrower later defaults, taxpayers are on the hook.”
A report published earlier this year by theCommunity Home Lenders of America(CHLA) showed that independent mortgage banks (IMBs), including UWM, were responsible for 84% of single-family mortgage originations in 2025. And their share of the FHA market stood at 90% — up from 57% in 2010.
FHA delinquencies are also higher than they were a year ago. MBA data for the second quarter of 2026 showed that 11.79% of FHA borrowers were behind on their payments, up 122 points from Q2 2025. And the seriously delinquent rate, loans that are at least 90 days overdue or in foreclosure, was up 227 bps to 2.06%.
The delinquency rate for conventional mortgages was 2.72% in Q2 2026, according to the MBA.
Broeksmit’s letter sought to disconnect elevated delinquency rates to increased risk for the MMIF, noting that the recent growth in stress is a natural result of the “orderly winding” of forbearance programs during the COVID-19 pandemic.
“Elevated delinquencies don’t indicate a program in distress. Far from exposing taxpayers to bailout risk, FHA’s Mutual Mortgage Insurance Fund remains exceedingly well-capitalized: its capital ratio stood at 11.47% in fiscal 2025, nearly six times the 2% minimum Congress requires, marking the 11th consecutive year the fund has exceeded its required level,” Broeksmit wrote.
Mortgage consultant Rick Sharga wrote earlier this year that more stress is likely to hit FHA servicing books soon, but he indicated that this is largely tied to revised loss-mitigation policies rather than risky underwriting.
“Because borrowers with FHA loans can take out a mortgage with as little as a 3.5% down payment, they generally start out with less equity than conventional borrowers. FHA borrowers, often first-time homebuyers, also typically have higher debt-to-income ratios, lower credit scores and lower cash reserves,” Sharga wrote.
“None of these factors necessarily makes FHA borrowers an unacceptably high risk; but they do limit the borrowers’ ability to escape a foreclosure if they find themselves in financial distress, or if market conditions take an unexpected turn.”
Broeksmit went on to address the Journal’s claims that UWM’s recent $2.05 billion capital infusion — the bulk of it through preferred equity by Oaktree and the Ishbia family — is a reflection of the FHA lending market or the IMB sector as a whole. He called UWM’s move “the product of one company’s own misjudged bet on rates, not any indication of poorly underwritten FHA mortgages.”
“Conflating a single firm’s hedging misstep with FHA’s program-wide performance makes for an eye-catching headline, but what you describe neither informs readers about the health of the FHA program nor the strength of the independent mortgage bank sector,” Broeksmit added.
In its op-ed, the Journal reported that 70% of FHA borrowers had debt-to-income ratios above 43% as of late 2022, compared to 28% of borrowers in 2012. And it said that 15% of FHA borrowers who took out a loan between June 2021 and March 2024 “fell seriously delinquent within a year.”
“To prevent foreclosures,Joe Biden’s regulators used the FHA insurance fund to cover arrears of struggling borrowers and offered to reduce their monthly payments by up to 25% for three years. The reprieve reduced foreclosures, but it magnified moral hazard by encouraging lenders to make riskier loans, knowing the government would rescue borrowers.”
Foreclosures were up 10% year over year in July across all loan types, according to ATTOM, although the company noted that the activity remained muted by historical standards. ATTOM also reported 21% growth in filings for the first half of the year compared to the same period in 2025. But market observers didn’t point to risky loans as the primary driver.
“The increase is being driven by a mix of financial pressure and continued normalization after several years of unusually low foreclosure activity. Higher taxes,insurance and everyday household costs are making it harder for some borrowers to recover once they fall behind, even when the mortgage payment itself has not changed,” saidMirza Hodzic, founder and managing director ofBlackWolf Advisory Group.
“Other than the inherent deficiencies with the VA loss-mitigation program, the increased foreclosures in the FHA space is a correction to more normal activity.Foreclosures throughout the COVID era were artificially suppressed. There will be inflated activity over the next one to two years while that correction occurs,” said Donna Schmidt, president and CEO of DLS Servicing.