FHA Mortgage Loan Applications - According to A.W. Pickel III (the past president of the National Association of Mortgage Brokers (NAMB) and the owner of LeaderOne Financial Corporation), FHA loans for first time homebuyers should be more available as interest rates and home prices increase.

Affordable housing continues to be a serious issue throughout the country and in Kansas City, where the City Council recently declared April as "Fair Housing Month."

Pickel stated: "Congress and this administration have made homeownership a priority in our country. Unfortunately, today the demand for homes continues to outpace new housing development and sales of existing homes, causing escalation of home prices."

Pickel said increasing access to loans insured by the Federal Housing Administration (FHA) will help low-to-moderate income homebuyers take advantage of the safer and less expensive financing options provided through the program.

Created in the early 1930s to help foster a more stable mortgage market, FHA acts as an insurer of loans that typically only require 3 percent down compared to requirements of 10 or 20 percent down for traditional mortgage loans. This lower down payment is a major factor in eliminating barriers to home ownership.

Mortgage brokers originate more than two thirds of all mortgage loans nationwide. Unfortunately, the FHA loan products are often uneconomical for mortgage brokers to deal with because of burdensome audit and net worth requirements that must be met before a broker can offer the loans. Pickel said that NAMB supports bonding requirements as an alternative.

He also suggested that the loan limits for FHA loans should be adjusted upward to meet demand in markets where prices have grown significantly during the housing boom.

He said these changes will make the loans more attractive for brokers and consumers. "Making FHA more competitive will improve the services and products provided by other lenders and insurers in the industry and help to restore FHA loans to levels of previous years," he said.

The subcommittee heard from several other witnesses during the hearing including Brian D. Montgomery, the Assistant Secretary for Housing, Federal Housing Commissioner, U.S. Department of Housing and Urban Development.


Mortgage applications in general have dropped, according to a recent survey by the Mortgage Bankers Association (MBA). The Market Composite Index, a measure of mortgage loan application volume, was 569.6, a decrease of 1.7 percent on a seasonally adjusted basis from 579.4 one week earlier.  On an unadjusted basis, the Index decreased 1.4 percent compared with the previous week and was down 14.9 percent compared with the same week one year earlier.

The seasonally-adjusted Purchase Index decreased by 2.5 percent to 407.4 from 417.7 the previous week whereas the Refinance Index decreased by 0.4 percent to 1526.1 from 1532.4 one week earlier. Other seasonally adjusted index activity includes the Conventional Index, which decreased 2.0 percent to 837.6 from 854.9 the previous week, and the Government Index, which increased 2.2 percent to 122.6 from 120.0 the previous week.

The four week moving average for the seasonally-adjusted Market Index is up 0.2 percent to 583.4 from 582.2.  The four week moving average is up 0.8 percent to 416.9 from 413.4 for the Purchase Index while this average is down 0.8 percent to 1564.4 from 1576.5 for the Refinance Index.

The refinance share of mortgage activity increased to 36.4 percent of total applications from 36.0 percent the previous week.  The adjustable-rate mortgage (ARM) share of activity increased to 28.9 percent of total applications from 28.6 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 6.56 percent from 6.50 percent, with points decreasing to 1.10 from 1.20 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 6.19 percent from 6.17 percent, with points increasing to 1.22 from 1.16 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs increased to 6.00 percent from 5.97 percent, with points increasing to 0.86 from 0.84 (including the origination fee) for 80 percent LTV loans.