Washington, DC – The House Committee on Financial Services, today, passed H.R. 1852 the “Expanding Home Ownership Act of 2007”.  The bill will revitalize the Federal Housing Administration (FHA), a provider of mortgage insurance to low and moderate income families seeking the American dream of homeownership.  Congressman Al Green (TX-09) passed two important amendments to further comprehensive FHA reform and increase opportunities of home ownership for hard-working Americans.

Through Congressman Green’s Alternative Credit amendment, FHA would establish as a pilot program an automated process using alternative credit information for borrowers with limited credit histories.  Examples of alternative credit histories include timely rent, utilities, and phone payments.  After two years, the GAO would provide a report to Congress on the performance of automated alternative credit in the FHA program. This would provide a prudent mechanism to test the usefulness of automated alternative data to better understand and measure the risk of borrowers with limited credit histories.

“Potential homebuyers may have limited credit histories for a number of reasons, often through no fault of their own.  Consumers with little or no credit history can be penalized or treated inequitably by the traditional mortgage lending process.  Borrowers with limited credit histories are often faced with denials or higher cost options that may not reflect their true creditworthiness,” stated Congressman Green.  “This amendment is an important part of the effort to revitalize FHA.  The FHA has historically played a leadership role in ensuring that underserved borrowers have opportunities to participate in lower cost lending.  This amendment would help to open the door to FHA to families who currently face the barrier of a limited credit history but may be creditworthy.”

“I came to Congress with the hope of helping those people who work hard but find themselves not getting results.  In the United States it is believed that if you work hard and play by the rules you will have the opportunity to succeed, however there are many people who do of all of this and still never realize this opportunity, as it relates to home ownership,” continued Congressman Green. “This measure would help those hard-working Americans who work full-time, consistently pay their bills, and have the money to make the down payment, but are not a part of the traditional credit market.  This measure carries with it hope- the hope that hard-working Americans can now have the opportunity to see the fruits of their labor blossom into the American dream of home ownership.”

Currently as many as 2.2 million Americans with subprime loans could eventually lose their homes. Predatory lending costs homeowners an estimated $9.1 billion each year.  To ensure to both FHA and its customers that adequate supervisory processes remain in place, Congressman Green also offered an amendment to impose on mortgage brokers and correspondent lenders, the least regulated part of the mortgage industry, duties that would let consumers know that they are not on their own. Congressman Green’s Mortgage Broker Amendment would impose on mortgage brokers and correspondent lenders the duty to safeguard and account for any handled money for the borrower, follow reasonable and lawful instructions from the borrower, and act with reasonable skill, care and diligence.  This amendment also stated that any broker found by the Secretary to have violated the requirements in this amendment, would no longer be allowed to originate any FHA-insured mortgage loans.

Copies of Congressman Green’s amendments and statements are attached.

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