Feb. 6, 2013 – NAFCU called for more oversight of the Federal Housing Administration’s loan lockout policy in a letter sent on the eve of a House Financial Services Committee hearing on the FHA’s role in mortgage insurance.
“Lawmakers should actively debunk the idea that the FHA is a safe haven for those who strategically defaulted on previous mortgages,” NAFCU President and CEO Fred Becker said in a letter Tuesday to panel Chairman Jeb Hensarling, R-Texas, and Ranking Member Maxine Waters, D-Calif. “This risk to the taxpayer, encouraged by current FHA policy, is a critical part of the safety and soundness conversation that must be reviewed.”
Becker told the panel of NAFCU’s ongoing concern about the ability of homeowners who used strategic default to get out from under mortgage debt to obtain new FHA-backed mortgages within three years of the action. Fannie Mae's lockout period is seven year.
Becker acknowledged the FHA’s recent pledge to step up enforcement of the three-year lockout policy. He also reiterated NAFCU’s longstanding support of the FHA’s role in the housing finance market and its support of legislation passed by the House last year to strengthen it.
“The FHA’s viability is crucial, especially in providing an option for those who would otherwise be unable to obtain a mortgage in the conventional mortgage market,” Becker said. “As community-based financial service providers, credit unions take great pride in responsibly assisting their member-owners attain homeownership. To that end, NAFCU looks forward to working with the Committee on FHA and related housing finance reform issues during this session of Congress.”