House Panel Okays FHA Reform

The House Financial Services Committee, in a 45-19 vote, has approved a Federal Housing Administration reform bill that would encourage more mortgage brokers to market FHA loans and raise the loan limits on these federally insured mortgages.To achieve wider distribution of FHA single-family loans, the reform bill (H.R. 1852) would allow mortgage brokers to forgo an annual audit and post a $75,000 surety bond. The National Association of Mortgage Brokers maintains that the audit is an unnecessary expense that prevents many brokers from offering FHA loans to their customers. "This is a great day for consumers, as there will be broad access throughout the country for FHA loan products," NAMB president Harry Dinham said. But the Mortgage Bankers Association said it is "foolhardy" to weaken the standards for brokers at a time when mortgage defaults are rising. "Replacing the audited financial statement with a surety bond would not only remove an additional layer of protection for consumers but could also threaten the safety and soundness of FHA," MBA president John Robbins said.