The National Association of Home Builders (NAHB) urged Congress and federal regulators to take steps to ease tight mortgage credit conditions afflicting many creditworthy borrowers and to support a stronger, more robust recovery of the housing and mortgage markets during an April 16 hearing.
Testifying before the Senate Banking Committee at a hearing examining regulatory burdens to obtaining mortgage credit, NAHB Chairman Tom Woods urged the Senate to pass the Mortgage Choice Act, legislation to improve access to home loans for working American families and first-time homebuyers that recently was approved by the House.
“By responsibly modifying the definition of points and fees for a home loan to be considered a qualified mortgage and ensuring that consumers can choose the lender and title provider best suited to their needs, this bill would allow more low- and middle-income families the opportunity to finance a home purchase,” Woods said.
Woods also called upon Congress to pass the Portfolio Lending and Mortgage Access Act.
“This legislation is intended to ease the ability-to-repay requirements for community lenders who may fear originating non-qualified mortgage loans and, therefore, may limit access to credit for homebuyers whom they believe to be creditworthy,” Woods said.
In addition to congressional action, NAHB believes that federal agencies can, and should, take actions to alleviate burdensome regulatory requirements to consumer access to mortgage credit.
Lenders are imposing credit underwriting standards that are more restrictive than FHA, VA and Fannie Mae and Freddie Mac require, making it more difficult for prospective homebuyers to obtain financing, he said.
Moreover, fees for government-backed mortgages continue to be at an increased level, even though the credit quality of the underlying loans has increased significantly, Woods noted.
NAHB also is urging congressional and/or regulatory action on two additional fronts that specifically impact the home-building industry — appraisals on new construction and access to housing production credit.
“Improper appraisal practices, a shortage of experienced appraisers, and inadequate oversight of the appraisal system continue to restrict the flow of mortgage credit and impede the housing recovery,” Woods said.
Likewise, despite signs of improvement in recent months, lenders are reluctant to extend new acquisition, land development and construction (AD&C) credit, citing regulatory requirements or examiner pressure on banks to shrink their AD&C loan portfolios as reasons for their actions.
“While NAHB continues to support comprehensive mortgage finance reform, we believe regulatory barriers can be alleviated to some degree by the various regulators as well as by specific legislative reforms,” Woods said. “Comprehensive legislation would serve to protect consumers with minimal disruption to the mortgage market.”