Protecting affordable, safe financing for American families

This week, GRRA CEO Mike Barr and 2010 GRRA President Bill Guill are in Washington, D.C. talking with our representatives about several different issues. This is part of a series of in-depth looks at issues that affect the housing market in Greensboro and around the country.

Without FHA, our economy could not be on the verge of recovery.

The Federal Housing Administration is not a subprime lender, has strong underwriting criteria to protect American taxpayers, and has never required a federal bailout. FHA borrowers are not subsidized, and pay both upfront and annual premiums. In 2009, more than 50 percent of first-time buyers used FHA, and nearly 80 percent of FHA’s purchase loans were to first-time home buyers. FHA also serves those who need to refinance out of risky adjustable rate mortgages (ARMs) or subprime loans with high interest rates. In 2009, approximately 835,000 borrowers refinanced into lower interest rate FHA insured loans, saving them an estimated $1.3 billion.

Higher loan limits need to be permanent and available in all markets.

Many argue that the FHA loan limit increases help only higher cost areas, but this is not the case. Currently, only 3 percent of FHA loans are above $362,750, and less than 2 percent are above $417,000. However, decreasing the current loan limits would reduce the availability of mortgages in 612 counties in 40 states, plus the District of Columbia. The resulting average limit reduction of more than $50,000 would have a dramatic impact on liquidity and could halt the housing recovery.

Congressional action needed:
Strengthen the FHA mortgage insurance program, make permanent the higher FHA loan limits and exercise caution before considering additional proposals that may have a profound adverse impact on FHA programs that serve such a critical role to our nation’s families.

House actions to date:

• The House Financial Services Committee marked-up H.R. 5072, sponsored by Reps. Waters (D-CA) and Capito (RWV) in April. This legislation allows FHA to increase (and decrease) the annual mortgage insurance premiums, and provides significant safeguards against unscrupulous lending. H.R. 2483, the "Increasing Homeownership Opportunities Act” (Sherman, D-CA; G. Miller (R-CA), making the current FHA loan limits permanent, has been introduced. Currently these higher FHA limits are set to expire on December 31, 2010.

What we're asking of our Representatives:

• Pass H.R. 5072 to strengthen FHA while still allowing for access to safe, affordable financing by responsible borrowers.
• Pass HR 2483 to make the loan limits permanent, and prevent dramatic decreases in the availability of affordable, safe financing nationwide.

Senate actions to date:

• The Senate has not acted on FHA reform.

What we're asking of our Senators:

• Pass legislation to strengthen FHA while still allowing for access to safe, affordable financing by responsible borrowers.
• Make the current FHA loan limits permanent, and prevent dramatic decreases in the availability of affordable, safe financing nationwide.