FHA official: agency has fallen down on the job
|April 5, 2006|
Secretary also says it's time to update RESPA
The Federal Housing Administration has faltered in its goal of helping low-income Americans buy homes, but intends to make up lost ground, its leader told a real estate service providers' group Monday.
"I know we need to make changes to make FHA a viable player again," Brian Montgomery, HUD's assistant secretary for housing and federal housing commissioner, told the Real Estate Services Providers Council's board of directors on Monday, the first day of the group's annual conference in Washington, D.C.
Also, the assistant secretary commented on the ongoing issue of changes to the Real Estate Settlement Procedures Act, which regulates affiliated business arrangements between real estate professionals. RESPRO is a trade organization that supports such arrangements.
"We all agree it's time to update it," Montgomery told the board of directors, saying that a roundtable discussion involving HUD and RESPRO leaders last fall has strengthened HUD's proposals for updating the 1974 act, which governs such things as kickbacks between real estate service providers.
"Just as we are committed to FHA reform as a means of promoting home ownership, we feel the same way about RESPA reform," Montgomery told the group.
The title insurance industry came under an intense spotlight last year after Colorado's Insurance Division in February 2005 investigated nine Colorado title insurers for alleged kickback schemes said to result in overcharges to consumers. The probe sparked dozens of investigations nationwide, in Florida, Washington, Hawaii, California, Oklahoma, Minnesota, Washington and other states.
Montgomery's speech touched upon a multitude of initiatives designed to meet President Bush's 2010 goal of an additional 5.5 million minority homeowners. Less stringent home repair and cash requirements along with increased lending levels should help the agency rebound after insuring just 5,000 loans last year compared to 122,000 in 1999, Montgomery said in prepared remarks.
"The [growing national housing] prices had something to do with that," said Montgomery of the loan decline. "It's great to do something about the loans ... I know we need to make changes to make FHA a viable product. We're going to open the doors for more home ownership."
Montgomery detailed a series of change the agency has made in hopes of competing with exotic loans developed by private industry such as interest-only and option adjustable-rate mortgages.
Also, he said, "The National Housing Act must be amended to allow FHA the flexibility to offer better products." Montgomery said his agency is proposing legislation that will address barriers to FHA financing such as the FHA loan limit, the minimum cash investment, the agency's "complicated down-payment formula," and changes to its premium structure.
Montgomery's remarks came during the start of the RESPRO organization's three-day conference in Washington, D.C. attended by real estate broker-owners, real estate franchisers, mortgage lenders and brokers, title insurers and agents, home builders, home warranty companies and other settlement service providers.
Copyright 2006 Innam News