MBA Seeks Hike In FHA Net Worth Requirements

The Mortgage Bankers Association wants to raise the net worth requirements for mortgage brokers originating Federal Housing Administration loans from $63,500 to $150,000. But the mortgage brokers want to do away with net worth requirements altogether. "Net worth requirements serve to assure that a vendor has a stake in the mortgage industry and they also provide some resources for a borrower to seek in the event of misfeasance," MBA chairman chief executive John Courson told a congressional panel. The National Association of Mortgage Brokers noted that net worth could disappear quickly as evidenced by the recent failure of hundreds of mortgage bankers, lenders and Wall Street firms over the past two years. NAMB past president George Hanzimanolis suggested that all originators should contribute to an FHA recovery fund instead and eliminate net worth requirements. "There is no evidence to demonstrate that loans originated by high net worth originators perform better that those with a low net worth," Mr. Hanzimanolis testified. The current FHA net worth requirement for mortgage bankers is $250,000. MBA would support a "reasonable increase," Mr. Courson said.