Clay Questioned FHA Commissioner Brian Montgomery; Underscored Collecting Data on Individual Government Entities as Paramount to Extending DPA Assistance to Minority Communities
CBC Mortgage Agency (CBCMA) today applauded Chairman Lacy Clay (D-Mo.) of the House Financial Services Subcommittee on Housing, Community Development & Insurance for his supportive remarks regarding down payment assistance (DPA) programs. During the subcommittee hearing entitled, “An Examination of the Federal Housing Administration and its Impact on Homeownership in America,” Rep. Clay questioned Brian Montgomery, commissioner of the Federal Housing Authority, to elaborate on the importance of DPA programs.
Below is an excerpt of the exchange:
Congressman Clay: “It appears that HUD can’t determine which government programs are providing down payment assistance on any FHA loan, which is critical before attempting to issue new regulations of government down payment assistance programs. Will you commit to not moving forward on any rule making or other administrative changes related to down payment assistance provided by governmental entities until HUD is able to collect data on individual governmental entities and has analyzed a statistically significant amount of data on the performance and pricing of FHA loans with down payment assistance from each specific governmental entity?”
Commissioner Montgomery: “Thank you, Mr. Chairman. As you know payment assistance has a long history at FHA…I just want to make sure that any down payment assistance provider is doing so within what our rules permit. Whether it’s a jurisdictional, whether it’s whether or not they financially benefit off the transaction which HERA doesn’t permit. So, I will commit to any effort to undertake rule making will be deliberate, it will be based on research and facts as we know it.”
“It is crucial that HUD collect data on individual government programs before trying to regulate them,” said Michael Whipple, vice president of CBCMA, noting that HUD recently issued a Notice for Proposed Rule Making, indicating that the agency intends to move forward with rule making in January. “Only by accurately tracking the performance and pricing of loans originated by each government entity can HUD better manage their risk and protect taxpayers.”
CBCMA provides secondary financing to homebuyers receiving loans from the FHA. Earlier this year, HUD initiated a major policy change that would have effectively ended or significantly reduced many DPA programs run by government entities — but without doing anything to protect the FHA Mutual Mortgage Insurance Fund. HUD did this without any data to support its actions. Following a legal dispute, a federal judge stayed HUD’s ability to enforce its new policy, and ultimately the agency withdrew it.
“Had HUD gotten its way, groups like CBCMA would have been put out of business, and borrowers would have suffered,” continued Whipple. “We hope that Commissioner Montgomery’s response indicates he intends to collect data on individual government programs before HUD engages in its announced rulemaking.”
About CBC Mortgage Agency
CBCMA provides secondary financing to borrowers, who are receiving loans insured by the Federal Housing Administration (FHA). CBCMA takes great care to ensure that the FHA loans perform well, including providing education as well as 12 months of counseling to borrowers after the purchase of their home. In addition, CBCMA regularly reviews its credit standards to ensure that the borrowers it assists are credit worthy. CBCMA is a wholly owned subsidiary of Cedar Band Corporation, a federally chartered tribal corporation wholly owned by the Cedar Band of Paiutes, a federally recognized American Indian band. For more information about CBCMA and its programs, visit chenoafund.org.
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