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A coalition of seven industry trade groups have sent a letter to the Chairs and Ranking Members of the House and Senate Transportation, Housing and Urban Development (THUD), and Related Agencies Appropriations Subcommittees to express support for full funding of the Fiscal Year 2024 budget request levels for both FHA and Ginnie Mae.
The industry groups seeking the budget request include the Community Home Lenders of America (CMLA), Housing Policy Council (HPC), Leading Builders of America, Mortgage Bankers Association (MBA), National Association of Home Builders (NAHB), National Association of Realtors (NAR), and National Reverse Mortgage Lenders Association (NRMLA).
On the FHA side, the coalition is asking that the FHA is fully funded their requested amount for FY 2024, and those expenses are used to help carry out affordable homeownership initiatives, housing rehabilitation programs, and advances in Information Technology (IT).
The group notes that FHA salaries and expenses are imperative to carry out the homeownership initiatives highlighted in the agency’s 2023 Annual Report—including:
- Rejuvenating the FHA 203(k) rehab program
- Increasing small balance FHA loans
- Supporting manufactured housing
- Moving to electronic submission of claims to eliminate paper claims
- Streamlining HECM reverse mortgage claims submissions
- Modifying income calculations to include rent payments on Accessory Dwelling Units (ADUs)
“FHA is the most important mortgage option for affordable mortgage loans for first-time, minority, and other underserved homebuyers–responsibly serving qualified borrowers with low down payment requirements or minor credit blemishes,” said the group in the letter. “As FHA is projected to generate $2.75 billion in profits (negative credit subsidies) in the FY 2024 budget, it seems counterintuitive to underfund requests for administrative accounts that support FHA.”
The FHA’s 2023 Annual Report found that last year, the FHA served more than 478,000 first-time homebuyers—the equivalent to 82% of its forward mortgage purchase volume. The FHA also served nearly 33,000 senior homeowners through its Home Equity Conversion Mortgage (HECM) program.
As for Ginnie Mae, the coalition’s letter calls out how underfunding would put important Ginnie Mae initiatives at risk, including enhancing market liquidity for issuers, and requests FY 2024 budget expenditure of $61 million, which is $21 million over FY 2023’s budget.
“It is essential that Ginnie Mae has the resources and staff the agency needs to carry out its responsibilities, and focus on core mission, including oversight of the 300-plus financial institutions (“issuers”) that rely on Ginnie Mae securities to access the capital markets,” said the letter. “These companies turn to Ginnie Mae to guarantee securities composed of loans backed by FHA, RHS, and VA loans. This broad base of issuers is vital to maintaining a competitive mortgage market and keeping mortgage rates as low as possible to maximize consumer choices. With the rapid increase in long-term mortgage rates, homeownership affordability is strained, which makes the competition created by a broad issuer base particularly critical.”
The group also notes that a 1% cut to the Ginnie Mae account would result in harmful mortgage market impacts and taxpayer risks. As noted, both the House and Senate THUD bills recognized this and funded increases of $11 million and $14 million, respectively.
“Whatever the process utilized to finalize HUD funding, the higher Senate funding increase to the Ginnie Mae account should be the absolute minimum that is prescribed,” said the letter.
Ginnie Mae recently published its Annual Financial Report for fiscal year 2023, highlighting the financial performance and accomplishments, and its plans and approaches for strengthening the U.S. housing finance market and supporting affordable and equitable housing opportunities for all Americans. During fiscal year 2023, Ginnie Mae supported more than 1.2 million households, including underserved communities, first-time homebuyers, servicemembers, and veterans. Mortgage-backed security (MBS) issuance topped $404 billion, and the Ginnie Mae MBS outstanding reached $2.476 trillion.
“In closing, we appreciate the tight budget constraints governing the difficult budget and appropriations choices before the Congress,” concluded the letter. “However, FHA and Ginnie Mae play a critical role in helping to meet our nation’s homeownership challenges. These two agencies contribute over $4 billion in negative credit subsidies to the appropriations process. Accordingly, we believe it is both fair and appropriate to fund the FHA and Ginnie Mae accounts within the FY 2024 THUD appropriations conference report at the originally requested levels.”
Click here to read the letter to the Chairs and Ranking Members of the House and Senate Transportation, Housing and Urban Development (THUD), and Related Agencies Appropriations Subcommittee in its entirety.
