Advocates Push for Affordability and Access Measures on FHA and VA Mortgages
Written By: Joel Palmer, Op-Ed Writer
Efforts to make certain mortgages more affordable was the major trend last week.
A group of industry organizations submitted a letter to the National Economic Council pushing for a reduction in mortgage insurance premium on Federal Housing Administration (FHA) loans.
“Sharply higher mortgage rates and rising home prices mean the time to act is now,” the letter stated.
Signed by the National Association of Realtors, the Mortgage Bankers Association, the National Association of Home Builders, and the Manufactured Housing Institute, the letter noted that existing home sales prices are up 11 percent year-over-year, while the cost of new homes have reached record levels in 2022. The letter also pointed out the recent rise in mortgage rates.
“The combination of higher prices and rates has put severe stress on prospective LMI and first-time homebuyers. According to the MBA’s Purchase Application Payments Index, the national median mortgage payment was $1,844 in July, up by more than $460 in just the first seven months of this year,” the letter noted.
The groups pointed out that the FHA’s Mutual Mortgage Insurance Fund’s (MMIF) capital reserve ratio stands at more than 8 percent, four times the statutory minimum reserve ratio. Plus, FHA loan performance has recovered from COVID-related forbearance.
“Against the backdrop of robust FHA capital reserves and rapidly deteriorating affordability, it is critical for the Administration to ensure low to moderate- income and first-time homebuyers are not left behind. Lowering the MIP – with a focus on FHA’s recurring “annual” premium -- increases homebuyers’ purchasing power by reducing monthly payments and directly putting money into their pockets every month, giving them the opportunity to become homeowners and build generational wealth. As economic conditions continue to worsen, reducing the MIP also allows borrowers the flexibility to spend on necessary items like food, gas, education, and other monthly bills.”
Veterans Affairs (VA) mortgages were also targeted for greater access last week, as the U.S. House passed a bill that will allow desktop appraisals and even waive appraisals during the VA loan application process.
The bill, H.R. 7735, also known as the ‘‘Improving Access to the VA Home Loan Benefit Act of 2022’,” would direct the Secretary of Veterans Affairs to “update the appraisal requirements for certain loans guaranteed by the Department of Veterans Affairs.”
The bill was introduced by Rep. Mike Bost, an Illinois Republican and ranking member of the House Veterans’ Affairs Committee. It was part of five bipartisan bills passed by the House last week designed to assist veterans.
A Senate version of the bill is awaiting passage.
“This bill will ease the homebuying process for veterans by letting them use the same modern purchasing tools that non-veteran homebuyers already use,” said Bost in a statement. “This will help them get into their new homes faster. The Senate must pass each of these bipartisan proposals as soon as possible.”
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
