Mortgage Bankers Association Testimony to House of Representatives

On April 10, David H. Stevens (President and CEO of Mortgage Bankers Association), testified before a House of Reps’ Financial Services Subcommittee.  Mr. Stevens’ oral testimony was released in an email by MBA to its members, and we’ve summarized it here for you.

Stevens highlighted the steps that FHA has implemented to address losses in its single-family portfolio, like raising insurance premiums and increasing down payment requirements.  He lauds FHA as “moving swiftly to protect taxpayers and the (MMI) fund,” while citing rising FHA average credit scores.  Stevens then outlines three priorities MBA identifies as necessary in future programmatic changes within FHA:

  1. Restoring financial solvency
  2. Preserving FHA’s critical housing mission
  3. Maintaining FHA’s countercyclical role.

Stevens also listed “a number of steps to further strengthen FHA and promote the return of private capital,’ such as lowering loan limits that were necessary at the height of the housing crisis and adjusting down payment requirements to mitigate risk factors like low credit scores.  He stressed the need to find the right balance of credit controls to offset risk.

Warnings abounded in regards to the restrictive influence of the fear of risk and subsequent attempts to reign it in. He paints the road to homeownership as wrought with challenges and says, “there may be families with good credit willing to put down substantial down payments that are being frozen out of the market because the risks of making any mistake are too great – and the rules of the road are unclear – and often contradictory.”  He warned of unrealistic requirements allowing only people with perfect credit to benefit from FHA’s programs, which would limit options for FHA’s actual target population.

The crux of Stevens’ statement was the need to clear up uncertainty in our real estate finance system. He added, “that includes not just FHA, but also examining the future of the entire housing finance system.”

Mr. Stevens’ full written testimony can be found here.  What do you think of MBA's position on our real estate finance system? Are there any weak points that you think they're failing to mention?

Let us know!

 

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