MBA's Kittle testifies on FHA's role in current mortgage market MortgagePress.comMBA, David Kittle, Principle Wholesale Lending, FHA, Senate Appropriations Subcommittee on Transportation, Housing and Urban Development and Related Agencies
David G. Kittle, CMB, Vice Chairman of the Mortgage Bankers
Association (MBA) and president of Principle Wholesale Lending Inc.
of Louisville, Ky., testified before the Senate Appropriations
Subcommittee on Transportation, Housing and Urban Development and
Related Agencies. In his testimony, Mr. Kittle discussed the
important role the Federal Housing Authority (FHA) will play in the
current mortgage market turmoil.
Below is Mr. Kittle's oral testimony, as prepared for
"When I started in the mortgage business, FHA programs helped us
serve many borrowers who otherwise would not get a loan. In 1983,
when I was a loan officer, over 90 percent of the loans I closed
were FHA insured. During the latter part of the 1990s, FHA loans
made up 38 percent of our volume. In the past couple of years, only
2 percent of our business went to FHA.
"My experience with the FHA program is similar to many other
lenders. Financial institutions progressed, reacting to quickly
changing markets. Unfortunately, during this time, FHA did not. FHA
was not adapting to meet borrowers' changing needs. As a result,
FHA became a 'bit' player in the market.
"MBA strongly supports FHA and believes it has a vital and
important role to play in today's troubled marketplace. FHA's
relevance in providing affordable homeownership financing has been
hampered by statutory restrictions and bureaucratic obstacles over
the last decade.
"With the current situation in the market, there is a strong
need for a robust and nimble FHA. FHA reform must be completed as
soon as possible. FHA needs to be given the tools to respond to an
"With the new focus on the ability of FHA to help during this
housing crisis, we strongly believe, and have been advocating for
several years, Congress should empower FHA to allow it to meet
today's needs and anticipate tomorrow's. MBA believes changes
should be made in three areas - FHA needs more flexibility to:
Introduce innovative new products, invest in new technology; and
manage their human resources.
"MBA appreciates Congress' and the Administration's thoughtful
approaches to developing rescue plans involving FHA for borrowers
in troubled loans. MBA is carefully reviewing the Administration's
proposal to expanding FHASecure and Chairmen Dodd and Frank's
proposals for a more extensive FHA program to keep homeowners in
their homes and avoid foreclosure. It is in the best interest of
the homeowner, the lender, and the community to do all that can be
done to keep the borrower in their home. Additional personnel will
also be critically necessary for FHA to meet an enhanced and
"MBA notes with great concern, in the Administration's Fiscal
Year 2009 Budget proposal, the FHA mutual mortgage insurance fund
threatens to go into the red next year unless changes to the
existing program are made or additional appropriations are
provided. MBA agrees with the Administration the FHA's mutual
mortgage insurance fund would run in the black, with little or no
premium increases necessary, if FHA reform proposals were passed
"Specifically, GAO has mentioned the technology issue in reports
on FHA modernization efforts. FHA told GAO its systems are poorly
integrated, expensive to maintain, and do not fully support the
agency's operations and business requirements. We urge Congress to
address these critical concerns.
"In conclusion, FHA has an important role to play in the market
in saving homes and assisting the underserved. For low- and
moderate-income families, FHA provides borrowers the best
opportunity to become successful and sustainable homeowners.
"However, over the past few years, the loss of market presence
meant we lost FHA's impact. We now know the result was some
families turned to more expensive financing.
"Now is the time to reverse the trend. FHA stands at a critical
crossroads. MBA urges Congress to enact legislation to reform FHA
and give it all the tools it needs to increase its availability to
borrowers, promote consumer choice, and ensure its ability to
continue serving American families. MBA stands ready to work with
you on this important issue."
Mr. Kittle's full written testimony can be found at www.mortgagebankers.org.