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NAMB Calls for Increases in Loan Limits and Portfolio Caps for GSEs

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RISMEDIA, Sept. 21, 2007-The National Association of Mortgage Brokers (NAMB) urged Congress to take steps to enable Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA) to provide much-needed assistance to homeowners facing eminent default or foreclosure.”Temporarily lifting Fannie Mae and Freddie Mac’s portfolio caps will inject necessary liquidity into a distressed market and help make financing more available and affordable for countless homeowners, especially those living in high-cost areas,” said NAMB Past President Harry Dinham in testimony before the House Financial Services Committee.

“Moreover, increasing the limits for GSE conforming loans and FHA loans in high-cost areas, coupled with elimination of the FHA down payment requirement, will greatly expand the opportunities for these entities to reach the first-time, minority, and low- to moderate-income borrowers their respective programs are intended to serve.”

Dinham said NAMB welcomes [Wednesday's] decision by the Office of Federal Housing Enterprise (OFHEO) to loosen restraints on GSEs, but urged OFHEO to go even further.
Dinham called for the Government Accountability Office (GAO) to complete its study of the recent rise in foreclosures in the mortgage market and to release its findings so legislators and regulators will have a new tool for minimizing foreclosures now and in the future.

“The reality is that a multitude of factors likely contributed to the steadily rising number of foreclosures,” NAMB past president Harry Dinham told the House Financial Services Committee, leading that Committee Chairman Barney Frank (D-MA) and Ranking Member Spencer Bachus (R-AL) to request a GAO study. “To date, the GAO has yet to release any findings,” Dinham continued. “Because we believe it is important that any legislative or regulatory effort be undertaken in a thorough and deliberate manner, we urge the GAO to conclude their study and publish the results as soon as possible.”

The market is stabilizing, Dinham said, as it adjusts to new guidance from federal and state regulatory agencies actions by major mortgage industry players. In certain instances, however, the market is overreacting, making it difficult for many honest, hard-working Americans to obtain the credit they need purchase homes and build wealth. “In short, we are experiencing a very serious credit contraction that has left consumers reeling.”

Congress has an opportunity to restore confidence and stability in the mortgage market and help countless homeowners facing the prospect of foreclosure, Dinham said, but it should act cautiously, thoughtfully, and deliberately when considering changes that will affect the ability of consumers to obtain affordable credit and remain in their homes.
NAMB reiterated a number of reforms it believes would protect future borrowers and ensure market stability, including:

- Requiring all loan originators to meet minimum education levels and pass criminal background checks and creating a national registry of originators governed by a federal agency.
- Requiring mandatory escrow accounts for taxes and insurance on all subprime loans.
- Strengthening enforcement of prohibitions against deceptive marketing and advertising of mortgage products.
- Clearly disclosing the role of the originator in mortgage transactions.
- Creating simplified, modernized, and consumer-tested mortgage disclosures including a revised Good Faith Estimate and a loan-specific payment disclosure.
- Encouraging consumer financial literacy.

NAMB also applauded the House of Representatives for passing H.R. 1852, a bill to modernize the Federal Housing Administration (FHA).

“This legislation will help revitalize FHA, and that’s good news for consumers,” said NAMB President George Hanzimanolis. “NAMB urges the Senate to act promptly and send this important measure to the President.”

For more information, visit http://www.namb.org/

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