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
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
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
"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
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 www.namb.org.