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Bernardi highlights Bush Administration's solutions to save homeowners from foreclosure

"This is the time for vision and prudence. We must give the American people real solutions to the housing crisis, not multiply problems. The Bush Administration favors responsible, specific efforts to save homeowners and allows FHA to be a central part of any lasting solutions," Bernardi said.

In August 2007, FHA modified its refinancing program to help creditworthy homeowners who missed payments after their teaser rates reset. Since then, more than 170,000 families who are current and past due on their home loans have refinanced with FHASecure, FHA's refinancing product. The number of single family mortgages endorsed by FHA has effectively doubled over the last year, Bernardi said. In the first quarter of 2008, FHA endorsements totaled more than 237,000, which is a 100 percent increase over the same period last year. Homeowners refinancing from the exotic subprime market to FHA are saving approximately $400 a month on their new mortgages.

Earlier this month, the Bush Administration announced additional administrative steps to extend FHA opportunities to troubled homeowners. Using its current regulatory authority, FHA will assist homeowners who are struggling with their current mortgage payments who have no other way to refinance their loans as their homes lose value. FHASecure will extend assistance to borrowers in subprime adjustable rate mortgages who were late on up to three consecutive monthly mortgage payments or at three different times over the previous twelve months. FHA will allow lenders to voluntary write-down outstanding principal mortgage balances and insure, which will provide an equity cushion and protect taxpayers against risk.

"Expanding FHASecurein this way is a good idea," Bernardi said. "Borrowers will reduce their principal payments and keep their homes. Lenders will avoid taking a more significant loss at foreclosure. Neighbors will avoid vacant homes in their neighborhood, depressing their home values. And localities will keep a viable tax base to fund community health, schools, and other valuable services. The changes we have made with FHASecurewill help us reach about 500,000 homeowners in total by the end of this year."

Bernardi also highlighted President Bush's stimulus package, which will make a positive difference in the mortgage market by temporarily increasing FHA's loan limits. For the rest of 2008, FHA is able to insure mortgages in higher-cost states and help homeowners hold on to their houses. The new loan limits were announced in March, and the affects of the program should be seen in the coming months.

"The reaction to the new, temporary loan limits should again explain the need for immediate passage of FHA Modernization, which we have urged for two years. Congress needs to make this important bill an immediate priority over other housing proposals that are under consideration. As a first order of business, a good FHA Modernization bill must be sent to the President," Bernardi said.

The Bush Administration's proposal to modernize FHA has bipartisan support. Introduced two years ago, this legislation would help hundreds of thousands of homeowners access safe, affordable FHA-backed mortgages by increasing FHA's loan limits, making downpayment requirements more flexible, and introducing fair pricing of insurance. The House and Senate have passed different versions of this legislation, but have not reconciled their differences and sent the President a final bill.

Bernardi also warned against proposals in Congress that "put us on a slippery slope, rapidly moving in the direction of a federalization of the mortgage industry."

"Americans don't want to pay for the risky financial behavior of others. And they don't want to make the Federal government the lender of last resort, with the private sector dumping bad loans on FHA and the taxpayers themselves. We must not harm our economy through solutions that further erode the foundation of the nation's housing market, hurt homeowners who are meeting their mortgage obligations, or prolong the correction," Bernardi said.

Finally, Bernardi said the mortgage industry, in cooperation with the Bush Administration, has stepped forward and pro-actively implemented workouts to help homeowners avoid foreclosure, but there is still more work to do. With more subprime loan interest rate resets expected, Bernardi urged the industry to have "a strong and effective response that will quickly help to stabilize housing prices." Yesterday, the HOPE NOW Allianceannounced that mortgage servicers have provided nearly 1.4 million loan workouts since July 2007 for homeowners with prime and subprime mortgages. This includes 503,000 homeowners in the first quarter of 2008.

"I believe that Congress and the Administration can forge a strong working partnership on housing. There is some common ground which should be explored and extended. I will continue to try to convince our lawmakers that we need wisdom, not over-reaction. We must give the American people real solutions to the housing crisis, not multiply problems," Bernardi concluded.

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