The Federal Housing Administration (FHA) celebrated its 80th anniversary at the White House with two panel discussions highlighting the past, present, and future of the agency and its impact on homeownership. National Association of Realtors (NAR) President Steve Brown joined distinguished speakers on the second panel to emphasize the significance of FHA-backed loans to the real estate market and housing recovery.
“As the leading advocate for homeownership, NAR has always supported FHA’s single- and multifamily mortgage insurance programs, which provide safe, affordable credit to qualified buyers,” said Brown, co-owner of Irongate Inc. Realtors in Dayton, Ohio.
During the economic downturn, when private capital fled the housing market, FHA made it possible for many families to purchase homes.
“During the depths of the Great Recession, at least half of my clients relied on FHA-backed loans because of extremely tight credit conditions,” said Brown. “Even today, FHA-backed loans are 30 percent of my book. FHA continues to make a real difference in people’s lives. Without this program, many creditworthy individuals wouldn’t be able to enter the market.”
According to Brown, the current housing recovery would not have happened if FHA had not been there when times were tough. Like other holders of mortgage risk during the downturn, FHA suffered financial losses as a result of market conditions and foreclosures, but the agency is back on track to regain financial solvency.
“FHA is in a position to reduce its record-high mortgage insurance premiums, which now make up nearly 20 percent of a monthly mortgage payment,” said Brown. Last month, NAR urged FHA to decrease burdensome fees and eliminate the requirement that mortgage insurance be held for the life of the loan.
Brown also suggested additional policy changes that would ensure creditworthy, low-downpayment borrowers have access to homeownership, including easing the condo certification process and providing FHA with the flexibility to change program requirements when necessary to protect the fund.