Consumers groups are opposed to allowing the Federal Housing Administration to charge risk-based insurance premiums, and they supported a decision by Senate appropriators to keep FHA reforms out of a HUD budget bill.The Consumer Federation of America, ACORN, the National Community Reinvestment Coalition, and five other consumer groups signed the joint letter complaining that the FHA reforms would force consumers with lower credit scores to pay more for FHA single-family loans. "We are concerned that customers priced out of the FHA market may have no other choice but to turn to subprime loans, and fear that some may fall victim of predatory lenders that operate in this market," the July 17 letter says. The letter is addressed to Sen. Christopher Bond, R-Mo., chairman of the Senate Appropriations subcommittee that oversees the Department of Housing and Urban Development's budget bill. The Senate Appropriations Committee approved a HUD budget bill last week without including FHA reforms requested by the Bush administration and housing industry groups. NCRC vice president Josh Silver noted that subprime lenders use risk-based pricing. "We think FHA should continue its role as offering an alternative to subprime lending and thereby increasing the competitive pressure on subprime lenders to lower their prices," he said.

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