Washington, DC – The House of Representatives, today, passed H.R. 1852 the “Expanding Home Ownership Act of 2007” by a vote of 348-72.  This 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.  Included in the bill were two important amendments passed by Congressman Al Green (TX-09) in the Financial Services Committee that would further comprehensive FHA reform and increase opportunities of home ownership for hard-working Americans. 

“More than 2.2 million families are likely to lose their homes to foreclosures in the next 18 months, at an overall cost to homeowners as high as $164 billion. If Congress does not act, we could reverse the progress our country has made over the last decade in bringing the dream of homeownership to over 70 percent of Americans,” stated Congressman Green.  “The FHA has historically played a leadership role in ensuring that underserved borrowers have opportunities to participate in lower cost lending.  Not only will this bill revitalize the Federal Housing Administration (FHA), it will also stem the rise in foreclosures that is hitting our nation.”
 
Congressman Green’s Alternative Credit amendment would allow for FHA to establish, as a pilot program, an automated process using alternative credit information for borrowers with limited credit histories.  After four years, the GAO would provide a report to Congress on the performance of automated alternative credit in the FHA program. The pilot program 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. This important amendment would help consumers who have demonstrated credit worthiness by paying their rent, utilities, phone payments, and other bills on time, but who do not have the traditional financial history to obtain fair pricing on their loans.

 “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.  “Consideration of alternative credit history is an important part of the effort to revitalize FHA because it would help to open the door to FHA to families who currently face the barrier of a limited credit history but may be creditworthy. Consideration of alternative credit 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.”

Congressman Green’s Mortgage Broker amendment also passed as part of H.R. 1852.  This amendment would impose on mortgage brokers and correspondent lenders – the least regulated part of the industry- 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.

“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. “Predatory lending costs homeowners an estimated $9.1 billion each year.  This measure would ensure both FHA and its customers that adequate supervisory processes remain in place on mortgage brokers and correspondent lenders- duties which will let our consumers know that they are not on their own.”

The Expanding Homeownership Act of 2007 would serve more families seeking to buy a home by authorizing zero and lower down payment loans, increasing FHA loans limits, and directing FHA to serve higher risk borrowers. The bill also doubles federal funding for housing counseling and authorizes up to $300 million a year for affordable housing from the bill’s excess profits, resulting from expanding FHA loans.