Castro: More Steps Needed to Provide Access to Credit
SAN DIEGO–HUD Secretary Julian Castro said the government and the real industry must continue to collaborate to provide housing opportunities for creditworthy borrowers.
“Credit provides the financial horsepower that folks need to meet their goals, and we still have work to do as long as one creditworthy borrower is shut out of the market,” Castro told attendees here at the Mortgage Bankers Association’s 102nd Annual Convention & Expo. “Our responsibility as public sector and private sector leaders is to do all we can to reward their hard work with opportunity. The opportunity to buy their own home. The opportunity to put down roots. The opportunity to build a brighter future.”
Castro said the improving housing market bodes well, noting sales of existing homes are near pre-bubble levels, home prices are at the highest levels since 2007 and homeowners have built $5.2 trillion in housing wealth since 2009. He said MBA-supported changes to FHA mortgage insurance premiums have helped make a difference.
“The record is clear: the housing market is stronger, optimism is up, opportunity is expanding,” Castro said. “And FHA has played a big role in writing this comeback story, stepping up during the crisis and stabilizing the market.”
Castro noted the 50 basis point drop in FHA mortgage insurance premiums produced instant results, saying total FHA volume rose by 50 percent the first six months of 2015; in June alone, FHA endorsed 65,000 first-time home buyers.
“Now we’ve got to build on this progress by giving every American who’s ready and willing to buy a home the opportunity to do so; this begins with access to credit,” Castro said. But it’s still too hard for creditworthy borrowers to get a loan. And groups who should be leading the home buying market of the future, millennials and communities of color, are among those being left out.”
Castro acknowledged that working with the government can be “challenging” to lenders, but noted FHA has taken several steps to create more clarity and certainty. He cited the revised FHA Single-Family Handbook, which consolidates more than 900 documents into a single online source, as a way to simplify the mortgage process and reduce defects.
Castro defended HUD’s controversial budget proposal to charge lenders an undetermined Administrative Fee to pay for technological improvements; he called current FHA technology old and outdated.
“Sometimes it feels like we’re sending faxes in an Instagram world,” Castro said. “But in this political environment, we can’t depend on the appropriations process to give us the necessary resources. This Admin Fee will give us the funds to upgrade our IT systems. We can all agree that a stronger FHA leads to a stronger housing market, which is why we’re fighting for these funds to better serve you and borrowers across the nation.”
MBA opposes the Administrative Fee, noting in a letter to House and Senate appropriators (http://mba.informz.net/MBA/data/images/Public_Affairs/MBA T-HUD FY16 House Letter.pdf) that the fee “will undoubtedly be passed along to consumers, raising the cost of mortgage credit just as the housing markets are showing signs of recovery.”
MBA noted that while it continues to staunchly support providing FHA with resources, both in staffing and systems upgrades, it has serious concerns with HUD’s “unprecedented” request to fund a portion of FHA’s administrative costs outside of the regular appropriations process. “More than a year after it was initially proposed, HUD has yet to provide any of the details sought by both Congress and stakeholders regarding the manner in which the fee would be structured and how the revenue will be used.” House and Senate appropriators rejected the proposed fee earlier this year.
Castro said borrowers must continue to be empowered with tools to be successful in today’s housing market. “This means building on the economic progress that’s been made over the last seven years by investing in industries that create good jobs, by raising the minimum wage so that a good day’s work is rewarded, by making college affordable so that a diploma doesn’t come with a lifetime of debt,” he said. “Our responsibility as public sector and private sector leaders is to do all we can to reward their hard work with opportunity. The opportunity to buy their own home. The opportunity to put down roots. The opportunity to build a brighter future.”
