Bush Administration Focuses on FHA During Homeownership Month
The U.S. Dept. of Housing and Urban Development today launched a month-long campaign to continue helping families avoid foreclosure. For the duration of National Homeownership Month, the Bush Administration will focus on how Americans can utilize the Federal Housing Administration (FHA) as a resource to keep their homes during this time of uncertainty in the housing market. FHA is at the center of the Administration's targeted, financially responsible efforts to help qualified homeowners refinance into safer, affordable mortgage products.
"Many Americans are facing the possibility of foreclosure and they need to be made aware of the options that are available to them through FHA," said Deputy Secretary Roy A. Bernardi. "To stop this cycle of foreclosure, Americans need to be better educated about the home buying process. They need to know what they are committing to when signing their name and know what mortgage best suits their needs."
This year's theme - "Back to Basics" - is designed to underscore the importance of having strong, common-sense fundamentals as a way to maintain a sustainable housing market. Many of those basics (verification of income, ability to repay) were ignored in the lead-up to the housing bubble. The Department will focus on helping families learn what the federal government is doing to help struggling homeowners; how to protect themselves against predatory lending; to better understand what goes into owning a home; and how to own a home they can afford.
At foreclosure prevention workshops and other events planned throughout the month of June, HUD officials will meet with prospective homebuyers and provide them with information to help keep them in their homes. On June 9, HUD's Assistant Secretary for Housing-Federal Housing Commissioner Brian D. Montgomery will deliver the keynote address at the National Press Club in Washington, DC. He will assess the overall state of housing and the role FHA is playing to stabilize the market and help families avoid foreclosure.
"During the month of June, we will continue to provide educational outreach across the country about the importance of getting the market focused on a back-to-basics approach. FHA has always been about the basics: verifying a borrower's income, ensuring their loan is affordable and helping them stay in their homes," said Montgomery. "We need to learn from the mistakes of the past to ensure that the American Dream of homeownership remains a bedrock of our society."
The Bush Administration has implemented a comprehensive plan to help families avoid foreclosure:
- In April 2006, President Bush first sent Congress an FHA modernization bill that could have prevented some problems in subprime loans market from occurring in the first place. This legislation would allow families to refinance with safer, more affordable FHA-insured loans. Final legislation still has not been sent to the President for his approval, over two years later.
- In August 2007, the Bush Administration launched a new initiative at FHA to modify its refinancing program, FHASecure, to help creditworthy homeowners swept up in subprime loans who missed payments after their teaser rates reset.
- In February 2008, President Bush requested $65 million for housing counseling in his Fiscal Year 2009 budget request. The Administration has increased funding for HUD's 2,300 approved housing counseling agencies by 150 percent since 2001. Fifty million dollars was approved for counselors in Fiscal Year 2008. Another $180 million went to the non-profit NeighborWorks this year to help them counsel struggling homeowners on how to prevent foreclosures. These programs are effective: 96 percent of households that saw a HUD-approved housing counselor and completed the program in the first three quarters of 2007 avoided foreclosure.
- In March 2008, as part of the President's economic growth package, FHA temporarily increased its loan limits until the end of 2008 to help hundreds of thousands of more families in high-cost areas purchase or refinance their homes at an affordable price. The new temporary limits range from $271,050 to $729,750.
- In March 2008, the Bush Administration proposed reforms to the Real Estate Settlement Procedures Act (RESPA) to help American homeowners better understand their mortgages and to allow them to shop for the best loan offer. Under this proposal, home buyers would be presented for the first-time ever with a standard form disclosing the important aspects of a loan. This new disclosure would ensure that home buyers are provided, early in the home buying process, complete, accurate and understandable information about their mortgages.
- In April 2008, the Bush Administration announced an expansion of FHASecure, which will start in July, to help homeowners with subprime adjustable rate subprime mortgages who can no longer afford their mortgages and missed up to three monthly mortgage payments over the past 12 months. Rather than go into foreclosure, eligible borrowers can refinance with FHA and lenders can voluntarily write down the outstanding subprime mortgage principal balances. This will provide an equity cushion and protect taxpayers against risk.
- Starting in July 2008, FHA will expand FHASecure using a fair, flexible premium structure. This pricing change, the first in FHA's 74-year history, will better protect FHA's solvency and ensure taxpayers do not assume the cost of this expansion by charging borrowers mortgage insurance premiums based on their credit risk.
More than 220,000 families have refinanced with FHA since September 2007. By the end of 2008, the FHA expects to help approximately 500,000 families stay in their home since the start of this effort. These policies complement FHA's strong loss mitigation program, which helped 65 percent of FHA borrowers who fall into serious default avoid foreclosure. Finally, HOPE NOW, a private sector alliance to help homeowners avoid foreclosure, recently announced that mortgage servicers have provided nearly 1.4 million loan workouts since July 2007.
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