FHA and NAR: Partners for 80 Years

May 14, 2014

When the Federal Housing Administration was created in 1934 in the depths of the Great Depression, the president of the National Association of REALTORS® at the time, Hugh Potter, shuttled back and forth between House and Senate offices to help the Roosevelt administration get the  National Housing Act passed.

“We are giving FHA all the help we can,” he said.

Today, the FHA is celebrating its 80th anniversary, and like it did during the Depression, the agency is playing a crucial role in helping to shore up the U.S. economy. In the depths of the downturn several years ago, it was the FHA that stepped in as private capital fled the market. And NAR is once again doing everything it can to help the agency achieve its mission of helping households become home owners while protecting the agency’s financial soundness.

“The partnership we’ve had with the REALTORS® has been strong for 80 years and particularly strong for these last few years,” U.S. Secretary of Housing and Urban Development Shaun Donovan said Tuesday at the REALTOR® Party Convention & Trade Expo in Washington, D.C.

Donovan was joined by NAR President Steve Brown and FHA Commissioner Carol Galante to recognize the FHA’s 80 years of service.

“I am grateful for FHA, and I join millions of Americans to say thank you,” Brown said.

Galante used the occasion to announce the launch of an initiative to help lower mortgage insurance premiums for borrowers who work with housing counselors. Under Homeowners Armed With Knowledge, or HAWK, households earn a 50 basis-point reduction in the up-front mortgage insurance premium and 10 basis points off their annual premium. After two years of steady payments, borrowers earn another 15 basis-point reduction in their annual premium.

HAWK, a voluntary four-year pilot program, is set to launch this fall.

The agency is also rolling out an initiative for lenders intended to simplify agency rules and, in other ways, make it less necessary for lenders to add credit overlays that have made it harder for households to get FHA financing even if they meet agency underwriting standards.

The initiative means “lenders will be able to lend more confidently” and “eliminate overlays,” said Galante.

Donovan encouraged REALTORS® to stay involved as lawmakers take up legislation to give the FHA more tools to protect its financial strength. He said that the FHA Solvency Act, a bipartisan bill sponsored by Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho), will give the FHA additional enforcement tools while protecting borrowers.

“NAR and FHA have been partners in progress since the beginning,” Donovan said. “We have a great deal to celebrate ... but credit is still too hard to get.”

—Robert Freedman, REALTOR® Magazine

Read more:

It's Taking Less to Get an FHA Loan