Since the private mortgage market collapsed, the Federal
Housing Administration has played a critical role by helping make mortgage
insurance available to millions of qualified home buyers. That is exactly the
way Congress designed the mortgage insurance fund to operate when it was
established 80 years ago, the National Association of REALTORS® said in testimony
recently.
NAR President Gary Thomas testified before the Senate
Banking Committee that without the FHA, the housing downturn and economic
recession would have been far worse for the nation.
“FHA helped fill the
void over the past five years after private lending fled the market by providing
safe, affordable access to mortgage credit to millions of Americans who wanted
to purchase a home,” says Thomas. “Had FHA not stepped in to fill the market
gap, many families would have been unable to purchase homes, current homeowners
would have experienced far greater drops in equity and their home’s value, and
our nation’s economy would be much further from a recovery.”
In his
testimony, Thomas said FHA has always safely provided access to mortgage
financing; it has never offered risky mortgage products, used predatory lending
practices or engaged in exotic underwriting. However, like other holders of
mortgage risk, FHA incurred great financial losses as a result of overall market
conditions that led to increased foreclosures.
Thomas says that NAR is
confident that FHA has already taken many of the necessary steps to help
stabilize the fund as well as numerous administrative changes to mitigate risk.
Those changes include five increases to mortgage insurance premiums since 2009,
hiring a credit risk officer, implementing credit score floors, requiring higher
down payments for borrowers with lower credit scores, and adopting a series of
measures to increase lender responsibility and enforcement, he said.
“FHA
currently has one of the strongest books on record and the quality of borrowers
has skyrocketed; continued market improvements and rising home prices will also
help improve the fund’s future financial condition,” says Thomas.
Thomas
saiys NAR welcomes a time when FHA’s market share is reduced to its more
traditional levels of 10 to 15 percent of the market, and the private lending
market is once again robust, but we are not there yet. Uncertainty about pending
financial regulations and the future of the secondary mortgage market are
keeping private lenders from returning to mortgage markets.
“Once the
rules for mortgage finance are resolved and housing prices stabilize nationwide
we anticipate that private investors will return to the market and FHA’s market
share will return to more traditional levels,” he says.
Thomas cautions
about making arbitrary changes to FHA, such as further increasing costs to
consumers or limiting the use of the program to certain types of buyers, only
for the sake of luring back private markets. While NAR supports changes that are
vital to the solvency and strength of the FHA fund, actions to deliberately
lower FHA’s market share could disrupt the availability and affordability of
mortgage credit and undermine the fragile real estate recovery.
“FHA
continues to play a significant role in the housing market and recovery. We
applaud them for their leadership and strength during the housing crisis, and
for continuing to serve the needs of hardworking American families who wish to
purchase a home,” saysThomas.
For more information, visit www.realtor.org.
For a list of FHA home in Fort Lauderdale Contact Us.