FHA Key to Housing Rebound

The Federal Housing Administration (FHA) is a primary source of mortgage financing for millions of America’s families and plays a key role in helping bring stability to the housing market, the National Association of Realtors® told the Senate Appropriations Subcommittee Friday.

“Without FHA financing, families would be unable to purchase homes and communities would suffer from continued foreclosures and blight,” says Lennox Scott, a member of NAR’s Real Estate Advisory Board. In his testimony, Scott shared NAR’s belief in the importance of FHA, and he voiced concern for the safety and soundness of its programs due to its dramatic growth over a short period of time.

“We believe that FHA has done a good job stepping up to today’s market challenges. However, along with the dramatic growth in market share comes greater responsibility and the need for increased infrastructure and staff,” Scott says. Over the past 18 months, FHA has handled an increase in volume four times greater than 2007 levels, increasing its market share to over 30 percent.

NAR suggests a number of FHA improvements to help maintain safe and affordable FHA loan products, such as investment in staff and technology; increased oversight and risk management; technical correction to help implement FHA programs; and monetizing the $8,000 first-time homebuyer tax credit so buyers may apply it toward the downpayment.

“The U.S. Department of Housing and Urban Development has made a number of important and valuable changes to FHA over the years that have enabled it to stand up to the challenges of today’s mortgage market,” Scott says. “FHA is now a principal source of financing for millions of America’s families, and without it, the economic crisis would be significantly prolonged. This is why it is so important to invest in FHA improvements and advancements.”

NAR pledged to continue to work for FHA reforms that will ensure the continued success, availability and safety of FHA mortgage insurance programs.

2009 FLORIDA ASSOCIATION OF REALTORS®