Community Mortgage Lenders of America (CML America) has sent a letter to Congress urging continued support for the Federal Housing Administration (FHA). The letter is co-signed by a broad coalition of housing finance, consumer and local government groups, including the Mortgage Bankers Association, the Community Mortgage Banking Project and the Consumer Federation of America.
The FHA is expected to release an audit report this week that will likely show the agency's reserves have dipped below the congressionally mandated level of 2% of outstanding debt. The FHA delayed publication of the audit last week after officials said they were double-checking the accuracy of data used in the audit, which was performed by an independent firm.
The trade groups' letter to lawmakers says the FHA's increased market share does not warrant increased risk management.
"We believe FHA is taking the necessary steps to assure it remains a critical source of mortgage insurance for America's homebuyers at all times – good and bad," the letter says.
According to a Sept. 30 report from the Federal Reserve, the FHA was responsible for 21% of all home loans during 2008, but by December of 2008, it had increased to 38% of home purchase loans and 25% of refinance loans. In addition, minority borrowers rely heavily on FHA, the report confirmed.
"In 2008, more than 60 percent of home-purchase loans and almost 40 percent of refinance loans to blacks were from either the FHA or VA," the Federal Reserve found. "For Hispanic-white borrowers, nearly 50 percent of their 2008 home-purchase loans and 21 percent of their refinance loans were from the FHA or VA."
The organizations urge lawmakers to continue support of the "regulatory and commonsense business changes" already under way at the agency.
"Unnecessary changes or restrictions to the program will only hamper our economic recovery and hurt millions of families who rely on FHA insurance to obtain safe, affordable mortgage financing," the groups wrote.