The Mortgage Bankers Association (MBA) recently released a document outlining near-term administrative and regulatory recommendations to reduce the costs of buying or renting a house.
The changes are designed to be implemented without legislative overhauls, reduce unnecessary regulatory and administrative costs, and preserve the safety and soundness of the housing finance system. The roadmap recommendations focus on five areas.
MBA advises several suggestions aimed at lowering the upfront and monthly cost of a mortgage. Similar suggestions also were made to lower the cost of financing and building rental housing. Suggestions include changes to Fannie Mae and Freddie Mac practices and reducing Federal Housing Administration (FHA) annual mortgage insurance premiums and administrative burdens in multifamily and healthcare lending.
Several suggestions were made regarding opening the door to credit for more qualified borrowers. These include modernizing loan originator compensation rules to help lenders meet or beat a competitor’s offer, and aligning manufactured and veteran housing underwriting standards.
To expand the supply of affordable housing, suggestions include expanding condominium and new-construction financing, and modernizing the FHA 203(k) rehabilitation program.
MBA recommends right-sizing bank capital requirements for mortgage risk. It also suggests reviving the private-label mortgage securities market to expand sources of mortgage capital.