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Federal Housing Administration Commissioner Carol Galante, pressed on the agency's three-year lockout policy, told lawmakers in a hearing Wednesday that the FHA doesn't condone advertising that makes FHA loans sound like easy credit and said the criteria for FHA loans are restrictive.

Rep. Bill Huizenga, R-Mich., questioned the FHA commissioner on lender practices and referenced advertising that invites people with bad credit to seek a sub-prime loan. "That cannot be acceptable," he offered.

"You are correct that we do not condone the kind of ads that . . . you've seen on the Internet, and I just recently issued to our lenders a reminder that we will enforce against any FHA lenders for advertising" in that manner, she said during a hearing by the House Financial Services Committee.

Huizenga, noting concerns raised by NAFCU President and CEO Fred Becker about the FHA's lockout policy, asked why there is just a three-year lockout at FHA when Fannie Mae has a seven-year lockout. Galante said that while a borrower can approach the FHA for a loan three years after a foreclosure, they have to meet FHA's criteria on credit score, debt-to-income ratio and other factors. "Not just anybody" can get an FHA loan, she said.

NAFCU's concerns were delivered to the panel in a letter that was entered into Wednesday's hearing record. In that letter, Becker urged lawmakers to "actively debunk the idea that the FHA is a safe haven for those who strategically defaulted on previous mortgages."

• Galante witness statement
• Becker's letter for Feb. 13 hearing