PRESS RELEASE
Posted on: March 27, 2007

Contact:
Jodi Greenblatt
(703)342-5852

Congress Can Help Consumers Now by Making More FHA Loans Possible
NAMB President Testifies About Importance of FHA Loans to Sub-Prime Borrowers and Improving Professional Standards

Washington, D.C. - March 27, 2007 - NAMB President Harry Dinham today testified that Congress could go a long way to help consumers now and in the future, particularly sub-prime borrowers, by making FHA loans a real and viable alternative in the sub-prime market.

Dinham spoke before the U.S. House Subcommittee on Financial Institutions and Consumer Credit at a hearing to examine ongoing challenges in the sub-prime mortgage market.

He urged Congress to increase the number of origination sources responsible for delivering FHA loans to consumers, pointing out that brokers are discouraged from participating in the FHA program by the unnecessary and burdensome financial requirements. NAMB predicts the removal of such financial barriers would increase mortgage broker participation in the FHA program from roughly 18% to 85%, and would thereby increase FHA's loan origination volume and market share by nearly 40%.

In his testimony Dinham also cited the need to redefine who is operating as a mortgage broker and improve professional standards for all mortgage originators.

"Consumers are often unable to distinguish one origination source from another," Dinham said, "and as the industry has evolved with the advent of the mortgage securitized market, there is no clear delineation between distribution channels. Today, a mortgage broker should include anyone that originates a loan with the intent or practice of delivering, distributing or selling it, servicing released, within 120 days."

NAMB believes education standards and criminal background checks for all mortgage originators will be effective measures in successfully combating abusive lending tactics and reducing the number of foreclosures in America.

Dinham also took the opportunity to criticize the mortgage broker registry proposed by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) because it is limited only to mortgage brokers.

"Consumers would get a false sense of security from this system as it stands today. Most consumers do not distinguish between origination channels and they would naturally assume that a loan originator at a bank would be held to the same high standards. This is far from the truth and bad actors at banks would still be able to freely travel from bank to bank even if convicted of fraud," he said.

In its written testimony NAMB urged the Congress to request the General Accounting Office conduct a broad, long-range study into the true causal effects of the rising foreclosures, and restated support for RESPA reform.

Click here to watch a live webcast of NAMB President Harry Dinham's testimony:

Click here for a full transcript of NAMB President Harry Dinham's testimony:

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The National Association of Mortgage Brokers is the voice of the mortgage broker industry with more than 25,000 members in all 50 states and the District of Columbia. NAMB provides education, certification and government affairs representation for the mortgage broker industry, which originates over 50% of all residential loans in the United States.

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