Mortgage bankers cautioned Congress today about suspending Federal Housing Administration mortgagees on a national basis because of regional performance. Lawmakers were also warned about increasing downpayment requirements on FHA loans.
In testimony today before the House Financial Services Subcommittee on Housing and Community Opportunity, Mortgage Bankers Association President and Chief Executive Officer John A. Courson outlined his group’s position on the Obama Administration’s package of reforms, according to a news release. Courson was testifying at a hearing on the FHA Reform Act of 2010.
Some of the reforms are being implemented administratively, while others reportedly require legislative action.
Courson told lawmakers that the administration seeks to give FHA the authority to nationally suspend a lender based of the performance of one of its regional branches. But he said FHA needs to think twice before making such a move.
“Suspending a lender is a very serious action and should be undertaken cautiously and only when justified,” the trade group executive stated. “MBA urges this subcommittee to ensure that this policy allows lenders ample opportunity to remediate any problems within a field office before receiving a nationwide sanction.
“These policy changes should be clear, transparent, and apply equally to all lenders.”
Courson also warned about an across-the-board increase downpayment requirements on FHA loans, though he did support the increase for borrowers with credit scores below 580. He said that such a move for all borrowers “would have a chilling effect on the ability of FHA to meet the credit needs of the borrowers.”
He also cautioned that the recent 50 percent reduction in maximum seller concessions will primarily impact low-to-moderate, first-time and minority borrowers.
