Submitted to the Wall Street Journal

Mr. Pinto wrongly presumes that paying higher fees for a mortgage means it’s better underwritten. (“Building Toward Another Mortgage Meltdown,” op-ed, Jan. 28). The Obama administration’s recent policy changes make mortgages more affordable for qualified buyers by reducing mortgage prices and fees, but in no way lower the lending standards to get those mortgages, as the article implies.

Realtors® have always believed in and supported a responsible, sustainable model for homeownership, and in fact, data show only about 0.4 percent of borrowers in 2011 who made down payments of 3 to 5 percent on Fannie Mae-backed loans have defaulted, which is no more than borrowers who made down payments of 5 to 10 percent.

Despite Mr. Pinto’s opinion of them, the Federal Housing Administration, Fannie Mae and Freddie Mac all have a mission to provide mortgage liquidity to qualified home buyers, including low- and moderate-income families and first-time home buyers. That mission was being impaired by unnecessarily high fees and downpayment requirements, which were limiting the housing choices of creditworthy buyers and putting off a full housing market recovery, which is why Realtors® supported the recent policy changes.

The FHA’s mortgage insurance premiums became so expensive that last year alone, roughly 234,000 creditworthy borrowers were priced out of the market, mostly at the expense of first-time buyers. National Association of Realtors® research shows the share of first-time buyers fell to its lowest level in nearly three decades, despite an improving job market and low interest rates. Qualified buyers shouldn’t be shut out of the market by high fees that came about because of the past mistakes of others.

Also, despite the rate reductions, loans backed by FHA will continue to bring a profit and further build the agency’s capital reserves.

Credit policy restrictions and high lending fees for borrowers are not conducive to a healthy housing market – continuing access to affordable and sustainable residential mortgages through quality underwriting is what Congress should really focus on.

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