Experts at the American Mortgage Conference say the combination of lenders apprehensive about making mistakes on loan apps and the qualified mortgage rule, and the need for low-cost financing to meet the changing demographics of minority and women home buyers whose income is not apt to rise, are two major challenges facing the housing industry. David Stevens, president and CEO of Mortgage Bankers Association (MBA), says originations this year are expected to fall 45 percent over 2013 due to a decline in refinance activity, resulting in the housing market having its slowest level of purchase activity since 1995. “If we don’t figure this out, you can go ahead and shut down your mortgage offices,” Stevens told attendees. “We have to have a national dialogue with proposed solutions. [Lenders and Washington policymakers] need to move beyond issues with distrust.”

Carol Galante, the outgoing Federal Housing Administration (FHA) commissioner, says, “The FHA has got to think about affordability” of its products. “We need to responsibly improve access,” according to nationalmortgagenews.com. Complicating the FHA’s position is its need to have a two percent capital ratio, which keeps its insurance premiums high, as MHProNews reported here Sept. 12, 2014, which leads to many consumers doing business with Fannie Mae and Freddie Mac instead. Galante suggested the FHA could encourage lease-to-own arrangements. “There is an idea of testing a vehicle that would let people use FHA loans and structured agreements to allow [renters] to assume an FHA loan after renting for some time,” she says. “As we go into this new world, helping people transition into homeownership … is going to be really important.” ##

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