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Statement by Ann Ashburn
AmeriDream, Inc. President & CEO

AmeriDream Lauds Changes That Streamline FHA Mortgage Insurance Program


February 16, 2006 – The Federal Housing Administration (FHA) is hoping that buyers, lenders, real estate agents and home sellers will do a double-take this year when it comes to looking at the FHA as a key player in the mortgage financing industry now that it has made good on its pledge to streamline its mortgage insurance program.

In December, after years of losing market share and faced with negative reactions for its enforcement of outdated requirements about property conditions and repairs of resale houses, the FHA has eliminated or soften many of its burdensome rules about property conditions and mandatory repairs. Now under a major change that took effect Jan. 27, the FHA is allowing lenders to collect from borrowers any "customary and reasonable costs" that are part of the settlement process. The changes are being viewed positively by industry leaders who say they will help stimulate sales in the entire housing market.

FHA Commissioner Brian Montgomery says the moves are intended to "align (the agency's) business process with industry practice."

“AmeriDream applauds the FHA’s efforts to expand affordable housing opportunities and make the dream of homeownership closer to reality for low-and moderate-income families,” said AmeriDream President and CEO Ann Ashburn. “Using AmeriDream’s downpayment assistance program, coupled with FHA, gives low-and moderate-income families not only the opportunity to become homeowners but also provides the protection for the homebuyer that comes with using both FHA and AmeriDream.”

FHA Commissioner Brian D. Montgomery sent a letter to lenders in mid-December announcing that the FHA “has shifted from its historical emphasis on the repair of minor property deficiencies and now only requires repairs for those property conditions that rise above the level of cosmetic defects, minor defects or normal wear and tear.”

The FHA will still require mandatory repair on more serious defects on resale houses, such as structural problems, foundation damage, bad roofing and electrical hazards that pose more serious risks to buyers, citing these minimum standards as a valuable consumer protection.

With regards to the revised closing costs rules, the government still will not allow lender's to mark up the charges; that is, to pay a vendor one price and charge the borrower another, higher price. "Only the actual cost for the service may be charged," Montgomery said. But the change does eliminate geographic disparities for lenders who operate on a national basis.

U.S. Department of Housing and Urban Development Secretary Alphonso Jackson is emphasizing the FHA’s need to change its outdated rules and procedures and find a way for lower income and minority renters to enter homeownership. He now believes the FHA has a high-quality product that will allow the agency to achieve this part of its mission.

“We need to reach out to black, Hispanic and other consumers with better loan concepts, less red tape and faster mortgage approvals, Jackson said in comparing FHA loans to most subprime loans. “FHA offers a better deal. We’ve got a superior product.”

About AmeriDream

AmeriDream, Inc., is a non-profit 501(c)(3), publicly supported organization founded in 1999. AmeriDream is one of the first organizations to pioneer providing down payment assistance to low-and moderate-income individuals and families to become homeowners. Through AmeriDream’s Downpayment Assistance Program, the organization has helped over 300,000 people buy and sell their homes. These homeowners have generated
over $20 billion in real estate sales. To learn more about AmeriDream please go to www.ameridream.org.