FHA Reform Needed Sooner Rather Than Later
Would-be Hispanic and low- to moderate-income homebuyers stand to lose if Congress fails this year to take up badly needed reforms to the Federal Housing Administration (FHA), according to the head of the National Association of Hispanic Real Estate Professionals (NAHREP), Washington, D.C.
During a September legislative briefing on Capitol Hill sponsored by MBA, NAHREP President and Chief Executive Officer Tim Sandos noted that maintaining the FHA's "status quo" will not help-and could actually harm-prospective Hispanic homebuyers.
"FHA's historic role as a trusted lender has been replaced by subprime lenders who address these barriers for first-time Hispanic customers, but at a much higher cost," said Sandos. "The void that currently exists between prime and subprime customers can be effectively served by a reformed FHA."
Over the past year, FHA has made several significant regulatory improvements to its single-family programs, including instituting electronic endorsement, modernizing its appraisal requirements to better match the conventional market, updating outdated restrictions on closing costs and creating a streamlined moderate rehabilitation loan program, explained John L. Garvin, senior adviser to FHA Commissioner Brian Montgomery.
As word has spread among lenders of these changes, it has made a difference in restoring confidence in the FHA program, but the overall result has been negligible in terms of market share recapture. FHA has done all it can administratively, but Congress needs to act with legislation in order to affect significant FHA reform, Garvin told Mortgage Banking.
The effort to modernize the 72-year-old FHA took a giant step forward at the end of July as the House overwhelmingly passed a proposed FHA reform bill-the Expanding American Homeownership Act of 2006 (H. …