A study by mortgage industry officials concluded Wednesday that the Federal Housing Administration’s mortgage-insurance program is a benefit to minorities and low- and moderate-income home buyers and should not be sold to industry.
The study, released by the Mortgage Bankers Assn., said the Reagan Administration’s proposal to transfer the FHA to private control would not be practical and would end up reducing home ownership opportunities for many families who depend on FHA-backed loans.
“We readily admit that it is in our own self-interest to have a smoothly functioning FHA,” said Ronald F. Poe, president of the mortgage group, who presented the conclusions of a panel of mortgage bankers at a news conference.
Poe said statistics show that about 50% of borrowers who take out FHA-backed loans could not have afforded their homes without the program, and he said 30% of all FHA loans are made to minorities.
‘Product Benefits Millions’
“The FHA program continues as an example of government initiative and private enterprise at its best,” he said. “It depends upon an efficient mortgage lending industry to deliver a product that benefits millions of Americans.”
The FHA insures mortgages for lower- and middle-income housing, reimbursing private lenders in the event of a default. The FHA-backed loans carry easier buyer qualifications than conventional financing and thus help people with low and moderate incomes to afford home purchases.
As part of its budget submitted to Congress in February, the Reagan Administration called for a study to be completed by early next year to determine whether the FHA should be sold to industry as a way to reduce the budget deficit.
Poe said the mortgage bankers wanted to do their own study so the Administration would have the benefit of the findings before making a decision on whether to recommend that Congress sell off the agency.