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NAMB releases new trend data on 2007 mortgage markets

Nov 18, 2007

NAMB president testifies to Senate about modernizing FHA programsMortgagePress.comFederal Housing Administration mortgage program On July 18, National Association of Mortgage Brokers President George Hanzimanolis, CRMS offered recommendations to update Federal Housing Administration (FHA) loan programs and expand consumer access to these mortgages during testimony before the U.S. Senate Committee on Banking, Housing and Urban Affairs. NAMB has long supported revitalizing the FHA program and believes hearings like this one are an important step in progressive reform. "NAMB agrees with many of the proposed reforms to the FHA program, but believes we should first make certain that the FHA program is a real choice for prospective borrowers," said Hanzimanolis. He explained that Mortgage Brokers currently face barriers that discourage their participation in FHA loan programs. "FHA must be modernized so that it can become an effective vehicle to provide borrowers, especially sub-prime borrowers, with affordable financing choices that can be sustained over the long term," said Hanzimanolis. To increase mortgage broker participation in FHA programs, NAMB supports replacing financial audit and net worth requirements with annual bonding requirements, explained Hanzimanolis. Brokers who participate in the FHA program will remain state-licensed entities subject to any state bond requirements, criminal background checks and educational requirements, in addition to any FHA-required surety bond. "This, in effect, creates a dual layer of protection for both the FHA program and the consumer," said Hanzimanolis. The surety bond actually enhances the current laws governing broker-originated FHA loans, he explained. "The process of obtaining a surety bond itself involves stringent prequalification standards and review." During the testimony, Hanzimanolis also called for adjusting the current FHA loan amounts for high-cost areas of the country so that more first-time, minority and low- to moderate-income homebuyers could access the safer and less expensive financing options that the FHA program could provide. He emphasized NAMB's support for allowing FHA loan limits to be adjusted up to 100 percent of the median home price. This would allow FHA loan limits to respond to changes in local housing markets. In addition, Hanzimanolis emphasized NAMB's support for developing risk-based pricing for mortgage insurance on FHA loans. He noted that providing increased capacity to assume and manage risk would allow FHA to serve borrowers who presently do not have private mortgage insurance (PMI) available as a choice. This reform also would benefit those borrowers whose PMI premiums would be reduced due to increased competition in the market. Finally, Hanzimanolis expressed the need to grant FHA flexibility in offering borrowers 100 percent financing products to help increase homeownership rates for first-time, minority and low- to moderate-income homebuyers. "A principal barrier to achieving homeownership for these families is financial—the lack of money for a downpayment and closing costs," he told the committee. "Elimination of the downpayment requirement will help break down this financial barrier to homeownership for many low- to moderate-income and minority families." For more information, visit
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