Minority homeowners have been hardest hit in the housing crisis, FHA official David H. Stevens told those gathered March 4 at the Multicultural Real Estate and Policy Conference in Washington, D.C.
The assistant secretary for housing and commissioner of the FHA said housing financing brought the country’s economy to its knees. “No parents were watching the kids,” he said.
Stevens said too many people looked at buying homes as a way to make millions. “That’s what was wrong. Owning a home was no longer about shelter; it became an investment. Mortgage programs started that weren’t sustainable,” he explained.
He said the administration has saved what could have been a larger crisis and the FHA has played a role in helping the recovery.
“FHA was boring with 30-year, fixed-rate loans,” he said. FHA has more than doubled the number of mortgages given in the last three years and is now 30 percent of the housing market’s mortgages. In 2007, FHA issued 400,000 loans and last year, two million were issued.
Stevens said changes have been made to achieve mortgage sustainability. Changes include:
A required 3.5-percent down payment
Minimum FICO scores of 580, with larger down payments. Studies show that default rates are too high when applicants have a credit score less than 580
Upfront mortgage insurance requirements.
“There’s a lot of work to do but the amount of investment in the housing recovery by this administration is unheralded,” he added. He said the FHA will work to create an environment of responsibility, integrity, trust and ultimately bring back private investments.