HUD Secretary Julian Castro spoke at the MBA conference in Las Vegas and make several strange statements.
Oct. 20 (Bloomberg) -By Felice Maranz, Christopher Maloney and Clea Benson- “It’s time to stop being apologetic about helping responsible folks buy their first home,” HUD Secretary Julian Castro says in remarks prepared for MBA conf.
• Says has seen “a lot of frustration” from lenders about FHA business post-crisis; lenders have been reluctant to lend because of “regulatory uncertainty”
• “You want to be able to manage your risk better — and so does FHA”
• Taking action including:
• Releasing “Blueprint for Access”
• Overhauling “Single Family Housing Policy Handbook”; 1st section will be effective next June; sees added sections largely completed by next yr
• Announced ‘‘Supplemental Performance Metric’’ that compares lender’s loan performance vs those also doing business within same credit score range
• Will minimize ‘‘Credit Watch Termination’’ risk for lenders who loan to ‘‘worthy borrowers with lower credit scores when their peers do not”
• Offering “new way to look at loan defects,” draft of “Loan Defect Taxonomy”
• In everyone’s interest to help by “expanding access to credit”
• “It’s too hard” to get a home loan; cites Urban Institute study that 1.2m loans a year missed “because credit is too tight”
First, I am not aware anyone being apologetic about helping responsible households buy their first home. At long as it is SUSTAINABLE homeownership. Clearly, with homeownership peaking in 2004-2006 and forecloseure filings starting to rise rapidly in 2007-2008, homeownership was NOT sustainable. And the decline in real median household income since 2007 is resulting in no recovery in the homeownership rate. If fact, it continues to fall.
Second, it is NOT too hard to get a home loan, Mr. Castro. It is that wages and incomes have not recovered, so DTI ratios are a problem.
Third, 3/1 ARM rates are now higher than the 30Y fixed-rate. That cuts off 3/1 ARMS from being a loan type for borrowers trying to get a mortgage for the lowest possible rate.
Lastly, it is NOT in everyone’s best interest to expand access to credit. Remember the housing and credit bubble that exploded, Mr. Castro?