Mortgage Lenders Form FHA Alliance

Nearly 90 mortgage lenders have formed an alliance to support passage of legislation to "reinvigorate" the Federal Housing Administration so it can provide safe and affordable financing for homebuyers, as well as a lifeline for subprime borrowers who are in trouble."We believe that a greater FHA presence in the mortgage market could have prevented the recent turmoil and that FHA is well-positioned to offer borrowers in trouble a simple and practical solution that will bring much-needed stability to local real estate markets," the FHA Alliance members say in a letter to leaders of the Senate Banking Committee. The House Financial Services Committee has approved a bill that raises the FHA single-family loan limits and allows the FHA to charge risk-based premiums and offer zero-downpayment loans. The Senate Banking Committee is scheduled to hold an FHA hearing on July 18. The formation of the alliance shows that lenders are "very interested" in the FHA reform legislation and view the changes as "very valuable to the housing finance system," said mortgage banking consultant Brian Chappelle. National companies such Bank of America, Countrywide Financial Corp., and SunTrust Mortgage, as well as regional companies such as Mortgage America, are alliance members.