Realtors® Urge Congress to Increase FHA Funding

The importance of the Federal Housing Administration’s role in the economic and housing recovery has never been more apparent, and the National Association of Realtors® reinforced this message in testimony submitted to Congress today.

“FHA insurance is one of the primary sources of mortgage financing available to families today,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “FHA has been playing a larger role in the mortgage market since the mortgage market meltdown and tightening of credit, and we’re asking Congress to work with the new administration to appropriately fund the staffing and infrastructure needed to complete FHA modernization.”

In the testimony, NAR also expressed concern that FHA could not continue to serve its constituency without rapidly implementing quality and system initiatives.

FHA’s market share has increased from a low of 2 percent in 2006 and is expected to grow to over 30 percent in 2009. FHA loans are rapidly becoming the only source of funding for many consumers, particularly those who are first-time home buyers and borrowers with low down-payments or less than perfect credit.

Even with appropriate funding and staffing, FHA will be challenged to keep pace with the increased business and additional responsibilities under the Housing and Economic Recovery Act.

“Although many improvements have been made, more needs to be done to keep pace with demand and dispel concerns that FHA may become the ‘dumping ground’ for subprime loans and high-risk borrowers,” said McMillan. “A vital and well-funded FHA will benefit everyone.”

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