"If you take away SFDPA, I don't think the FHA is going to lose 40 percent of its volume," he says.
With their programs under threat from Capitol Hill and HUD, Nehemiah Corporation and Gaithersburg, Maryland-based AmeriDream Inc., a provider of SFDPA, are working on contingency plans.
Nehemiah Corporation may offer alternative products that will take the place of FHA's SFDPA program, Syphax says.
While many in the mortgage banking industry associate Nehemiah Corporation with SFDPA, the nonprofit organization is also the lead developer in the second-largest infill development in northern California, and its national community loan fund lends nationwide.
Ann Ashburn, president and chief executive officer of AmeriDream, argues that saying "something" will fill the place of SFDPA is not good enough.
And without SFDPA, the primary users of the program--including low-income, minority and women-headed households--will not get the boost they need to become homeowners, Ashburn says.
HUD has not fully taken into account what will happen to the Mutual Mortgage Insurance Fund (MMIF) if SFDPA is eliminated, Ashburn argues.
And it's not just borrowers who need to consider the influence of SFDPA. Those who buy loans in the secondary market may also have reason to look very closely at loans they purchase.
In recent years, SFDPA has transformed into something else, as fraudsters have mimicked the FHA-approved program but taken things to a fraudulent extreme, Head adds.
While clearly those players weren't using legitimate SFDPA programs, critics such as Head suggest the fraudsters were inspired by reputable programs.