Mortgage Bankers Association Chairman Robert Story Jr., testified before the House Financial Services Committee at a hearing on the Federal Housing Administration’s Fiscal Year 2009 actuarial report.

During his testimony, Story said that protecting and improving FHA requires a multifaceted approach which ensures that FHA has the right resources. 

“In support of these goals, we recommend measures such as raising net worth requirements for FHA-approved lenders, reevaluating credit and underwriting standards, reexamining the insurance premium structure and establishing sensible consumer and lender protections for Home Equity Conversion Mortgages,” Story told the committee. “MBA believes these actions will not only help FHA face current market challenges, but also ensure the agency’s future viability.”

Towards the end of his testimony, Story spoke about the recent changes to FHA’s reverse mortgage program, specifically on the decision to reduce the principal limits:

Although MBA understands the business rationale for this change from a risk perspective, it is critical to note that it is the consumers who are being negatively impacted because they are receiving lower proceeds for the same cost. MBA also objects to the short implementation time for such a significant policy change.

Some of the other choices for addressing the HECM shortfall include Congress appropriating a subsidy, FHA changing the upfront premium, or FHA reducing the HECM loan limit. MBA does not support a reduction in the existing loan limit. We are working with FHA and other industry groups to recommend a long-term solution that would keep the HECM program self-sustaining.

Some of the other choices for addressing the HECM shortfall include Congress appropriating a subsidy, FHA changing the upfront premium, or FHA reducing the HECM loan limit. MBA does not support a reduction in the existing loan limit. We are working with FHA and other industry groups to recommend a long-term solution that would keep the HECM program self-sustaining.

To read a copy of his testimony click here.