The Community Home Lenders Association (CHLA) today urged Congress to take a balanced approach in responding to the Federal Housing Administration’s latest financial report, and stressed the need to maintain FHA as a vital source of mortgage loans at this critical time for housing markets. The CHLA weighed in as the Senate Banking Committee proceeds to hold a hearing on Thursday on FHA and its projected $16 billion shortfall in its recent Mutual Mortgage Insurance Fund (MMIF) report.
“We commend HUD Secretary Donovan for the additional steps he recently announced to protect FHA and we applaud Congress for moving quickly to hold hearings on FHA,” the CHLA said. “It is appropriate that Congress exercises vigilance in evaluating the financial health of FHA. But we urge Congress not to take any precipitous actions that could impede the critical role FHA plays in financing home purchases, at a time when we are starting to see a rebound in home purchases and housing prices.”
CHLA notes that HUD has taken significant steps in recent years to strengthen FHA, including raising premiums and ending the costly seller funded nonprofit downpayment program. In addition, HUD Secretary Donovan recently announced additional steps to improve the financial performance of future FHA loans and to reduce losses on existing FHA distressed loans.
“FHA played an essential role in stepping in to provide mortgage credit in the wake of the financial crisis of 2008,” CHLA said. “As a consequence, FHA is experiencing stress from providing mortgage loans during a period in which many other lenders and institutions suffered much more serious losses. Congress should not adopt measures which harm FHA’s ability to perform its vital function, simply based on projections for prior loans made before important FHA reforms were put in place.
CHLA points out that the MMIF Report is just a projection of future performance, that it projects that the FHA will be fully capitalized by FY 2014, and that the Congressional Budget Act includes budgetary controls designed to ensure that future loans are projected to be profitable.
The Community Home Lenders Association is a non-profit national association of small- and mid-size community-based mortgage lenders, whose mission is to support housing policies that provide for fair treatment of community mortgage lenders, and that promote competitive, transparent mortgage markets and broad access to credit for homebuyers and homeowners.
COMMUNITY HOME LENDERS ASSOCIATION (703) 475-7365
Scott Olson, Executive Director Scottolson@communitylenders.org