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The NATIONAL ASSOCIATION OF REALTORS® testified Wednesday that legislation to reform the Federal Housing Administration will greatly benefit home buyers by improving access to FHA’s safe and affordable credit products.
“REALTORS® support efforts to give consumers affordable alternatives to subprime mortgages,” said John Anderson, broker-owner of Twin Oaks Realty in Crystal, Minn., testifying on behalf of NAR. “We believe that a modernized FHA could offer a safe alternative, especially for borrowers with less than perfect credit.”
NAR asked the Senate Banking, Housing and Urban Affairs Committee to move forward in enacting legislation to reform the FHA program. As subprime loans reset and real estate markets no longer experience rapid appreciation, “a reformed FHA would be perfectly positioned to offer borrowers a safer mortgage alternative and bring stability to local markets and local economies,” Anderson testified.
Furthermore, increasing FHA loan limits in high-cost areas will help working families such as teachers and police officers afford to buy homes in the communities where they work, Anderson said.
NAR Vows Support
NAR supports current legislation that would increase loan limits from $362,790 to $417,000. NAR also supports eliminating the 3 percent minimum cash investment and down payment calculation and allowing FHA the flexibility to provide risk-based pricing. For current FHA loan limits in your state or county, click here to visit the official HUD website.
“Providing a universal and consistently available FHA loan product is the hallmark of the program, which has made mortgage insurance available to individuals regardless of their racial, ethnic, or social characteristics during periods of economic prosperity and economic downturn,” Anderson said. “Now, more than ever, FHA needs to be strengthened to continue to be available to borrowers. In just the past few months at least 25 subprime lenders have exited the business one way or another. FHA is a leader in preventing foreclosures.”
FHA’s loss mitigation program authorizes lenders to assist borrowers in default. By encouraging lenders to participate in the loss mitigation efforts and penalizing those who don’t, FHA has successfully helped home owners keep their homes and reduced the level of losses to the FHA fund.
“We see a revitalized FHA as not only a means of safeguarding against abusive loan practices in the future, but also as a tool to help families who may be currently facing foreclosure as their loan rates adjust upward,” Anderson said. “FHA is the only mortgage insurance program that provides financing to all markets at all times. NAR stands ready to work with Congress to preserve the FHA’s place in the market as a safe, affordable alternative so millions of Americans can afford to achieve the dream of homeownership, and keep their home for as long as they choose.”
Source: REALTOR® Magazine Online
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