NAMB applauds passage of HR 3221: Congress passes comprehensive home mortgage aid bill with national licensure and registry requirements for all originatorsMortgagePress.comHR 3221, NAMB, mortgage registry, Housing and Economic Recovery Act of 2008
The National Association of Mortgage Brokers has praised the
passage of HR 3221, the Housing and Economic Recovery Act of 2008
by Congress. This important legislation will implement much needed
reforms to the Government Sponsored Enterprises (GSEs) and the
Federal Housing Administration (FHA) program.
"We believe this bill will implement necessary consumer
protections while promoting stabilization of the current market and
industry," said Marc Savitt, CRMS, president of NAMB.
Among the provisions in the bill:
Authorizes a $25 million appropriation to improve technology,
processes, program performance, eliminate fraud and provide
appropriate staffing. Effective January 1, 2009, it also increases
the FHA loan limit to the lesser of 115 percent of the local median
home price or $625,500 with a floor for lower priced markets of
$271,000, establishes a 12-month stay on FHA's proposal for
risk-based premiums, sets the down payment requirement at 3.5
percent and prohibits seller-funded down payment assistance (both
direct or through a third party).
GSE oversight reform
Creates a new regulator (five-year term, appointed by the
President, confirmed by the Senate) with oversight authority
similar bank regulators, establishes a new affordable housing fund
and capital magnet fund to be funded by a 4.2 basis point fee on
all new loans, significantly changes the affordable housing goals
and raises the conforming loan limit to the higher of $417,000 or
115 percent of the local median home price, not to exceed $625,500
(the stimulus limits remain in effect until January 1, 2009).
Creates a voluntary program for lenders to write down the loan
balance in exchange for an FHA guaranteed loan not to exceed 90
percent of the newly appraised value of home. The lender would pay
a three percent FHA loan origination fee. To qualify, the borrower
must have a debt-to-income ratio above 31 percent on the original
loan. The program is capped at $300 billion.
Creates a $7,500 refundable tax credit for first-time home buyers,
expands the volume cap for the low income housing tax credit,
allows for tax-exempt treatment of bonds guaranteed by the Federal
Home Loan Banks and exempts the low income housing tax credit from
the alternative minimum tax.
Low income and affordable housing
Encourages the development of low-income and affordable housing by
harmonizing multi-family FHA mortgage insurance programs with the
low income housing tax credit. Allowing these two programs to work
together will result in more effective uses of both programs.
Authorizes the Treasury Secretary to temporarily increase the GSEs'
line of credit and to, if necessary, buy equity in the GSEs in
order to provide confidence to credit markets. Also provides a role
for Treasury and the Federal Reserve in GSE oversight to ensure
safety and soundness.
Requires TILA disclosures to be delivered seven days prior to loan
origination, requires that disclosures include examples of how
payments would change based on rate adjustments in addition to
disclosing the maximum possible payment under the loan terms and
mandates that the consumer receive early disclosures before paying
anything more than a nominal fee that covers the cost of a credit
Raises the cap by $11 billion on tax-free bonds that state housing
finance agencies may use to help at-risk homeowners by refinancing
troubled loans and appropriates $4 billion for states to purchase
and renovate abandoned and foreclosed properties.
Encourages state officials to create a national licensing system
for residential loan originators, allows HUD to create a licensing
system for those states that fail to enact their own, establishes
minimum qualifications for all loan originators and requires
federal regulators to create a registry for banks and thrift
employees who originate loans.
"This legislation will do so much good for so many people," said
Mortgage Bankers Association Chairman Kieran Quinn. "The FHA
modernization and GSE oversight reform provisions will help
stabilize the housing market. The FHA rescue plan will help
thousands of families across the country refinance their mortgage
and stay in their homes, while the tax incentives will encourage
potential buyers to get off the sidelines and help stabilize home
prices. And the GSE backstop provisions will help quell the turmoil
in the credit markets."
NAMB believes this bill will provide necessary reforms to
strengthen the housing finance system while assisting at-risk
homeowners through the FHA program. In addition, HR 3221
establishes a nationwide loan originator licensing and registration
system that will set minimum standards for loan originator
licensing. This section will help provide effective consumer
safeguards by requiring background investigations, testing, and
continuing education for all originators.
"Since 2002, NAMB has called for the licensure and registration
of all mortgage originators," said Savitt. "This section of the
bill will help protect consumers financial information and rid all
mortgage origination channels--banks, lenders, credit unions and
mortgage brokers--of bad actors."
For more information, visit www.namb.org.