SOURCE: National Association of Realtors

National Association of Realtors

November 15, 2009 11:44 ET

Stevens Lauds Realtor® Role in Housing Recovery, Assures Soundness of FHA Program

SAN DIEGO, CA--(Marketwire - November 15, 2009) - Realtors® are the face of the housing market, the focal point of information, involvement and inventory, and the Federal Housing Administration is committed to help them be successful, FHA Housing Commissioner Dave Stevens told more than 1,000 Realtors® at a gathering here today.

"You help to stabilize the community, and without homeownership, there can be no stability in communities," Stevens said. "Together, we must never let over-exuberance overtake the housing market again, and interrupt the housing market and the lives of untold millions of Americans. Our goal must be nothing less than to craft a solid, sustainable housing market, a market with a secure foundation for the future."

Stevens said he and Shaun Donovan, secretary of the Housing and Urban Development, recognize that the National Association of Realtors® has been at the forefront of efforts to address the housing crisis, and he has met with NAR on several occasions to consider their concerns. FHA has taken direct action on a number of those concerns.

Stevens announced that effective Monday, Nov. 16, FHA will no longer require a second appraisal on high-balance loans for properties in declining markets. "We did not find our previous policy to be particularly helpful and were very concerned about the additional burden on lenders and consumers," Stevens said. He noted the policy change will bring industry alignment, streamline loan processing and reduce costs to consumers.

FHA has also taken action on NAR suggestions concerning condominium mortgages. "We did not do all that you asked, but we did enact some temporary measures to meet challenges in the condo market," he said. FHA has excluded vacant and bank-owned real estate units from the calculation of owner-occupancy ratios in condo projects and reduced presale requirement from 50 percent to 30 percent, among others. These standards will take effect December 7, and spot loan approvals will extend until February 1 to provide time for transition.

Stevens also cited policy changes in FHA's management of risk, including elimination of the streamline refinancing program as of January 1, and requiring FHA-approved lenders to hold more capital to ensure responsible lending and risk management. He also hired, for the first time in FHA history, a chief risk officer.

Commenting on FHA's role in the present market, Stevens said FHA's share of the mortgage market vaulted from 3 percent three years ago to more than 25 percent today, as FHA was called upon to counter the foreclosure crisis and offer a viable alternative for first-time home buyers.

More than 80 percent of FHA's recent mortgages have been to first-time buyers, he said, and FHA has led the market in percentage of mortgages to qualified minority homeowners.

"Some are worried about the volume of FHA loans, as FHA capital is eroding," Stevens said. But he assured critics that FHA reserves are expected to be sufficient, with $31 billion in cash reserves, and that the FHA portfolio is sound, with an increase of 60 points in average credit scores and a decline in 30-day delinquencies.

He called comparisons between FHA's situation now and the situations that faced other lending institutions "ludicrous and unfounded."

Stevens said he looks forward to the day when FHA can return to a more normal market share. "But we will stay in the game until the private capital system can get its footing back. Without FHA during the past several years, there would not have been a market for housing."

The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Information about NAR is available at www.realtor.org. News releases are posted in the Web site's "News Media" section in the NAR Media Center.

REALTOR® is a registered collective membership mark which may be used only by real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS® and subscribe to its strict Code of Ethics. Not all real estate agents are REALTORS®. All REALTORS® are members of NAR.

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