(LoanSafe.org) – Burden To Borrower Is Modest & Ensures Access To Responsible Credit

Washington DC — David Berenbaum, Chief Program Officer, National Community Reinvestment Coalition, issued the following statement today about the Federal Housing Administration’s changes to its mortgage program:

“The changes announced today by the FHA represent an attempt to navigate a prudent course without negatively impacting access to credit or contributing to a further slowing of the housing market in communities of color. While borrowers will bear more of the costs of the government insurance program through higher premium charges, the additional revenue will help ensure that FHA stays solvent. The burden to the individual borrower is modest and should ensure, overall, that borrowers have access to responsible credit. While some less credit worthy borrowers will need higher down payments, this is a necessary move in markets where a decline in home value can wipe out a new buyer’s equity within weeks after the settlement.  

We believe that the FHA has a difficult path to navigate, but we think they have successfully realized three core objectives simultaneously:

·      First, to reduce the financial exposure of  the FHA fund through tighter credit rules;
·      Second, to sustain the flow of mortgage credit sufficient to make sure the housing market doesn’t go into a renewed negative spin;
·     And third, to avoid “balancing the FHA books” on the backs of credit worthy working families.

“Notably, FHA was created in 1934 to heal the U.S. housing market during the Great Depression and for decades – due to a stable housing market – it has turned a  profit for taxpayers. Today, it is more critical than ever that FHA remain a strong gateway for responsibly underwritten credit in the communities that we serve, while also ensuring a healthy and sustainable mortgage marketplace beneficial to all. Transparency and enforcement will help to realize this.  NCRC will continue to review the new rule and provide additional information in the coming days.”

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The National Community Reinvestment Coalition is an association of more than 600 community-based organizations that promote access to basic banking services, including credit and savings, to create and sustain affordable housing, job development and vibrant communities for America’s working families.

Source: NCRC

Moe Bedard
My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.