NAR President Vicki Cox Golder testified before the House Committee on Financial Services recently that the Federal Housing Administration mortgage insurance program is a critical part of the American housing fabric and has never been more important than it is in today's market. NAR strongly opposes H.R. 3706, the "FHA Taxpayer Protection Act of 2009," which would increase FHA's downpayment requirement.
Golder said that the FHA program is fiscally sound with responsible underwriting, and needs enhancements but not radical reform. She encouraged Congress and the Obama administration to tread lightly before making changes to a program that has a profound impact on economic recovery and serves the nation's families.
"With the collapse of the private mortgage market, the importance of the FHA mortgage insurance program has never been more apparent. Thus far in 2009, nearly 80% of all FHA insured purchasers are first-time homebuyers. And if you take a closer look at the numbers, you'll see that program is doing exactly what it was designed to do - make more affordable mortgage financing available to homeowners," said Golder.
She pointed out that this year almost 50% of non-white Hispanic borrowers used FHA insurance or the Veterans Administration's loan guaranty for home-purchase loans and 21% used the FHA or VA program to refinance a home loan. Last year, more than 60% of home purchase loans and about 45% of refinance loans to black homebuyers were insured or guaranteed by either FHA or VA.
FHA's decline in reserves is in part a reflection of a projected change in home price values, and is not tied to excessive increases in defaults or unsound underwriting practices, she said. In citing the recent FHA audit, Golder said, "If FHA makes no changes to the way it does business today, the reserves will actually exceed 2% in the next several years. FHA has sufficient reserves."
If you are thinking of buying a home, whether single family, coop or condo, in the DC area, please give Lise Howe a call. She works with first time buyers, move up clients, and investors too, from Frederick to Fredericksburg!
If you are thinking of using an FHA loan to buy a new home, please let your representatives in DC know how important this program is!
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