Rep. Neugebauer: This is not your parents FHA
The attacks on the Federal Housing Administration continued after a House Financial Services Committee hearing on Wednesday.
Rep. Randy Neugebauer, R-Texas, issued a statement after a hearing on bringing private capital back into the housing market, saying:
"I am becoming increasingly concerned as FHA strays far away from its intended mission. FHA was created in the 1930’s with a unique mission to serve targeted populations such as first-time homebuyers, communities with little access to credit, and other higher-risk borrowers who were still creditworthy."
Neugebauer added, "I'm a homebuilder by trade, and I’ve been in this business for a long time. And I can tell you, FHA’s mission has changed a great deal over that time. This isn’t your parents’ FHA. There are now loan limits loan limits now of upwards of $700,000. In fact, over 90% of FHA loans insured today would not have even qualified for insurance under the original program.
Neugebauer attempted to quantify the risk of today's FHA guidelines using numbers from his local real estate market.
"Since the onset of the financial crisis, the agency has morphed from a mortgage insurer of last resort to a dominant component of our mortgage finance system. It has done this by expanding its insurance to higher income borrowers and houses in the upper end of the marketplace. For example, in my hometown of Lubbock, Texas, the area median home price is roughly $132,000; however FHA can insure loans up to $271,050 – more than double the median home price. That doesn’t make sense."