The Federal Housing Administration advised mortgagees about new requirements under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, while a new FHA rehabilitation program is now available to borrowers in the Southwest. Two firms announced their approval as FHA mortgagees, and several service providers hope to help them with business.
A proposed rule setting minimum standards that states must meet to comply with the S.A.F.E. act has been published by the U.S. Department of Housing and Urban Development, a Dec. 15 statement indicated. To comply, states must put in place a loan originator licensing program that requires originators to take an education course, pass a test and undergo civil, criminal and financial background checks. If HUD determines that a state's licensing standards do not meet the minimum requirements of the act, HUD is required to implement and administer a licensing system for that state.
HUD also has issued a proposal for the implementation of the provisions of the Helping Families Save Their Homes Act of 2009. The Consumer Mortgage Coalition, in a letter to HUD's Office of General Counsel, said it supports the provision of the proposal stating that "HUD will no longer approve, or require approval of, correspondent lenders or mortgagees, as it does today." But the group requested clarification of mortgagee eligibility requirements, specifically such as disqualification if the mortgagee engages in practices that "demonstrate irresponsibility," a term that, it said, requires clarification.
Borrowers in California, Nevada and Arizona can now use the FHA Streamlined Section 203(k) rehabilitation program in conjunction with two of the Federal Home Loan Bank of San Francisco's matching grant first-time homebuyer programs. Those programs are the Bank's Workforce Initiative Subsidy for Homeowners and the Individual Development and Empowerment Account grant programs, which provide funds of up to $15,000 that can be used for downpayment and closing costs. The FHA Streamlined 203(k) program allows for minor upgrades and repairs of up to $35,000 on homes purchased under the program.
With such views of today's role of FHA, the Mortgage Bankers Association, National Association of Home Builders and National Association of Realtors have jointly asked House and Senate majority and minority leaders to enact legislation extending the higher loan limits of the FHA, Fannie Mae and Freddie Mac, which were set to expire at the end of 2009.
And with today's higher FHA share, more lenders are becoming FHA-approved. Among lenders most recently approved to originate FHA-insured mortgages are Tampa Bay Federal Credit Union and Greenwood, S.C.-based Community Capital Corp. subsidiary CapitalBank. Both TBFCU Real Estate Lending Manager Dean Clark and CapitalBank Senior Vice President Timothy O. Howell, in announcing their institutions' FHA approvals, pointed to the importance of providing FHA loans with their low down payments to their communities.
"The lower down payment requirement of an FHA loan is key for younger or first time buyers in today's market place," said Clark.
And Howell noted that "customers in the communities we serve will benefit from the availability of FHA loans."
Meanwhile, service providers continue to meet and boost their compliance with the latest FHA requirements, including those spelled out in five mortgage letters issued last fall. AppraiserLoft.com and DartAppraisal.com both cited their Web-based systems, and Providence, R.I.-based Lincoln Appraisal & Settlement Services stresses that it provides title and closing services to the residential and commercial real estate industry, as well as compliance with FHA appraiser independence, geographic expertise and other requirements.
All this activity underlines the importance of FHA in today's market, a fact underlined by recent statements by Community Mortgage Lenders of America, which represents the nation's independent mortgage lenders, and NeighborWorks America, a national nonprofit organization created by Congress to provide financial support, technical assistance, and training for community-based revitalization efforts.
"The FHA is the backbone of the mortgage market today," said CML America Chairman Scott Stern, and must remain "strong and sound so that the agency can continue to play a key role in the housing recovery."
"(T)he FHA," said NeighborWorks America CEO Ken Wade, "is an important part of stabilizing and safely growing America's housing market."
The agency, he continued, is now on "the right track. It is serving qualified homebuyers, developing a plan to increase its capital strength, and laying the foundation to continue stabilizing the housing market until the private sector is back on its feet."
In a separate letter to the House and Senate, the MBA, NAHB, NAR, NeighborWorks America, Community Mortgage Lenders of America and 11 other organizations, including the National Association of Counties and the U.S. Conference of Mayors, urged Congress "to assure the continued effectiveness of this important agency," which "has never been more important than it is today."
"Without FHA," the letter warned, "families would be unable to purchase homes and cities and counties would suffer from continued foreclosure and blight."
But a negative view of FHA has been made by Edward Pinto, who was the chief credit officer at Fannie Mae from 1987 to 1989 and is currently a consultant to the mortgage-finance industry. He maintains that FHA's capital reserve account stands at a negative $40 billion and that FHA-insured loans are "very much like fixed-rate subprime loans," with "similar FICOs and similar projected loss performance."
Phoenix-based MGN Web Properties hopes to generate traffic from prospective FHA borrowers at its new Web site, My-FHA-Mortgage.com. In addition to providing articles, calculators and other information about FHA-insured loans, the site also includes user feedback and social networking to help consumers decide if they are fit for an FHA-insured mortgage, explains MGN's Nathan Hall.