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Brad A. Morrice becomes New Century CEO

National Mortgage Professional
Nov 21, 2006

House overwhelmingly approves landmark FHA legislationMortgagePress.comFederal Housing Administration Disparate voices from across the mortgage industry landscape—mortgage brokers, mortgage bankers, federal regulators and legislators—hailed the passage of the Expanding American Homeownership Act (HR 5121) by the U.S. House of Representatives in a vote of 415-7 on July 26. HR 5121 is a legislative proposal that would enable the Federal Housing Administration to reach deeper into the pool of prospective borrowers who are currently willing to pay non-prime rates to become homeowners because they believe they have no other options. National Association of Mortgage Brokers President Harry Dinham, CMC applauded passage of the act, stating that it would expand access to more affordable loans for traditionally underserved populations. HR 5121 includes important provisions to revamp costly annual audit requirements within the FHA loan program that would allow more mortgage brokers to offer these loans to prospective homebuyers. "NAMB worked very hard to ensure language that could make it easier for more brokers to offer HUD loans was included in the House bill," said NAMB President Dinham. "Although you can never say for sure what Congress will do, we are optimistic that the Senate will pass a bill with similar language, and we will continue to work toward that end." HR 5121 would allow mortgage brokers to acquire an annual bond in place of the audit requirements. This approach would ensure that the FHA program is protected and addresses cost concerns for many brokers. Dinham added that since mortgage brokers originate the vast majority of new home loans nationwide, eliminating the economic barrier that kept many brokers from participating in the FHA program will give consumers more home-buying options. "Expanding the FHA's ability to meet the needs of the underserved population is important to the administration and Congress," said Dinham. "We believe the Senate will be able to pass a bill this year, and we will work both sides of the Senate Banking Committee to achieve a bi-partisan bill." Other provisions included in the Expanding American Homeownership Act would: • Increase the conforming loan limits for lower- and higher-cost areas; • Increase the maximum loan term from 30 to 40 years; • Balance borrowers' financial profiles and needs with appropriate premiums; • Increase loan limits for two-, three- and four-family residences; • Make improvements to the FHA Home Equity Conversion Mortgage program; • Revise the definition of mortgage to insure condominiums as a single family unit rather than a multifamily project; • Eliminate FHA's three percent cash down requirement to offer no down payment loans; and • Allow FHA to adjust the mortgage insurance premium to match the borrower's risk. U.S. Department of Housing and Urban Development Secretary Alphonso Jackson added, "I applaud the House for passing this far-reaching legislation and express appreciation for the leadership provided by Reps. Bob Ney, Maxine Waters [Calif.], Gary Miller [Calif.] and Patrick Tiberi [Ohio]. I expect the Senate to take similar action thanks to the efforts of Sen. Jim Talent [Mo.] and the support of Sens. Mel Martinez [Fla.], Johnny Isakson [Ga.] and Saxby Chambliss [Ga.]." The FHA reform effort is currently stalled in the U.S. Senate. Banking Committee Chairman Richard Shelby (Alaska) has asked the U.S. General Accounting Office (GAO) to conduct a study of the reform proposals; however, some supporters of FHA reform see this as a delaying tactic. Andrew Gray, spokesman for the Senate Banking Committee, said that while Shelby didn't have a timeline for committee action on the reform proposal, "we realize the FHA is in need of reform." He also noted that the GAO study was not a prerequisite for committee action. President Bush is calling on the Senate to pass this bill, stating, "This bill will improve FHA's ability to help lower- and moderate-income families achieve the American dream. I encourage the Senate to join the House and pass this critical legislation." "At this time, NAMB's leadership is working with contacts within the Senate to ensure that the Senate bill contains broker-friendly language," noted Dinham. "We think this will be effective, however, when Congress returns and if we sense things are not going as we'd hope, we'll call on the power of our members and ask them to urge their senators to support easing the requirements for brokers." For a copy of HR 5121, visit www.house.gov.
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