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National Mortgage Professional
Jul 28, 2008

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: FHA modernization 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). FHA rescue 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. Tax incentives 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. GSE backstop 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. TILA reform 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 report. Empowering states 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. Licensing 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
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