Federal Government Seeks Fairer Financing for Homebuyers

Federal government seeks fairer financing for homebuyers

USATODAY

I found USA TODAY's story about high delinquency rates among many minority homebuyers with subprime loans to be a very informative piece about this very serious problem ("In 2005, half of minorities purchased their homes with subprime loans/Today, delinquency rates are soaring in minority neighborhoods," Cover story, Money, April 26).

My colleagues and I at the U.S. Department of Housing and Urban Development have been working diligently with Congress to present a practical, safe solution for borrowers like those highlighted in the article. Two bills in the House of Representatives would make significant improvements to the Federal Housing Administration (FHA) and would provide low- and moderate-income homebuyers with safe financing options at fair prices. These modifications include increased down payment flexibility and increased loan limits.

Unlike subprime loan products, FHA-insured mortgages don't carry any surprises: There aren't any prepayment penalties, balloon payments or teaser rates. A modernized FHA would provide a low-risk, "back to basics" approach to mortgage lending. I am optimistic that both houses of Congress will make FHA reform a priority in 2007.

Brian D. Montgomery
Assistant Secretary for Housing
U.S. Department of Housing and Urban Development
Washington