The National Association of Realtors urged Congress Wednesday to enact a package of changes to current law and policy to help make the lending process easier for first-time home buyers.

"Access to affordable credit remains a huge problem for prospective homebuyers, those wishing to refinance and our economy overall. The homeownership rate has fallen almost to levels last seen in 1990," Mabél Guzmán, NAR conventional finance and lending committee chair, wrote in her testimony before a hearing of the Senate Banking Committee.

She added, "Today, the number of homes purchased annually remains less than half of what was purchased prior to the real estate bubble and subsequent collapse."

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The number of first-time buyers entering the market is at the lowest point since 1987, despite historically low mortgage rates, Guzmán said.

A slow economy and tight housing supply have played a role in the problem as well as policies that have priced mortgages out of reach for many aspiring homeowners, she noted.

"Though it is prudent to protect taxpayers against further losses and bailouts of the Government Sponsored Enterprises, the Federal Housing Finance Authority must use restraint. Encouraging policies or economic models that significantly overcharge consumers may well result in billions of dollars of profits for the GSEs, but will also have a significantly negative impact on mortgage lending." Guzmán argued.

She also said the Federal Housing Administration's premiums have hiked a program created to help first-time homebuyers.

While NAR supports FHA's efforts to shore up its emergency reserve fund, the association's membership believes the FHA's actions have come at the expense of the agency's borrowers, Guzmán wrote.

"Despite a healthy portfolio, FHA is charging borrowers historically high rates and requiring them to pay mortgage insurance for the life of the loan, with no opportunity to cancel that mortgage insurance other than to refinance into a non-FHA product," Guzmán wrote.

 

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