WASHINGTON (December 1, 2011) - The Federal Housing Administration mortgage insurance program plays an important and vital role in the nation’s housing financing system and has shown tremendous leadership and strength during the economic crisis, the National Association of Realtors® said in testimony today.
NAR President Moe Veissi testified before the House Financial Services Committee regarding the health of the FHA single-family insurance fund.
“As the leading advocate for homeownership, NAR believes in the importance of the FHA mortgage insurance program and applauds FHA for continuing to serve the needs of hard-working Americans who want to purchase a home,” said Veissi, broker-owner of Veissi & Associates Inc., in Miami. “FHA has insured loans for more than 37 million families since 1934 and ensures access to safe and stable mortgage financing in all markets, particularly in recent years when private financing evaporated.”
Since the collapse of the private mortgage market, FHA has been one of the primary sources of mortgage financing available to responsible, qualified borrowers, with as little as a 3.5 percent down for individuals with good credit. The program is held as a standard for solid underwriting and responsible lending practices. Without FHA, many families – especially those traditionally underserved by the private market – would be unable to purchase a home, and communities would further suffer from foreclosures and blight.
Veissi praised FHA for its financial stability and said that despite its capital reserve fund remaining below the congressionally-mandated level, the agency has taken adequate steps to ensure its long-term financial soundness. He said FHA continues to have significant resources – enough to pay 30 years’ worth of expected claims on its portfolio – and has $2.5 billion in additional cash reserves.
“FHA has shown its considerable strength during the economic and housing downturn, filling the gap when the private market is not engaged in the market. The agency is not subsidized and has never required a federal bailout; actual total reserves are higher than they have ever been,” Veissi said.
He also offered recommendations to help ensure FHA’s continued strength and availability to homeowners. Those include additional enhancements to FHA’s condominium rules, making permanent the reinstated FHA mortgage loan limits, and legislation to increase the FHA multifamily loan limits in high-rise properties. Ensuring adequate liquidity for homebuyers and investors will further the housing and economic recoveries, said Veissi.
While NAR supports efforts to strengthen FHA and reduce its current market share, Veissi urged Congress to use caution before making changes to the program, which is one of the primary sources of mortgage financing available to families today and critical to the nation’s housing finance system. He said that changes should not be made at consumers’ expense by artificially increasing the cost of homeownership and disenfranchising families who wish to purchase a home, especially while the housing market recovery remains fragile and the private mortgage market is only tentatively engaged.
“We wholeheartedly support the FHA program and we stand ready to work with Congress to enhance FHA’s mission, service and purpose,” Veissi said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
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