Below is Mr. Courson’s oral statement, as prepared for delivery.

“Thank you for inviting the Mortgage Bankers Association to testify this morning on the Federal Housing Administration and the risks and rewards that come with the agency’s recent growth in market share.  And as someone who was an FHA-approved lender for over 40 years, I have a special appreciation for the important role FHA plays in our nation’s mortgage market.

“When FHA began to lose market share to subprime, MBA was one of the first to advocate for legislation to modernize FHA.  While some argued that FHA had outlived its usefulness and should be allowed to wither on the vine, we at MBA felt that more borrowers – not less – should be encouraged to utilize its programs – programs we knew to be safe, sound, and affordable.  And with so much credit drying up, it’s become a lifeline to borrowers and a key component of our nation’s economic recovery.

“I want to take a moment to acknowledge the priority this Committee has given, on a truly bipartisan basis, to reinvigorating FHA.  Working together, we passed a strong FHA Modernization bill as part of last year’s Housing and Economic Recovery Act.  Many of the provisions in that legislation were ones MBA had advocated – reforms that will allow FHA to play an expanded role in the current housing crisis and for years to come.

“Now here’s the good news.  These efforts have worked.  FHA is back.  It’s gone from a mere 3 percent share of the market just 18 months ago, to a healthy 20 percent today.  That’s quite a rebound and it’s where we believe FHA should be.

“But as we applaud FHA’s turnaround, that increase in volume is a double-edged sword that requires FHA and FHA-approved lenders to be more vigilant than ever about who is allowed to originate FHA loans.  Much like you, we are concerned that some unscrupulous lenders may now be turning their attention to FHA and its programs.  To be clear, MBA strongly opposes mortgage practices that jeopardize consumers and damage the reputation of the mortgage industry.

“In the next few weeks, Mr. Chairman, MBA will be unveiling its FHA agenda for the new Congress.  Let me touch briefly on the issues that will be at the heart of this agenda.

“First, we need to provide FHA with greater resources – both staff and technology – to expose and eliminate lenders that do not uphold ethical standards.

“MBA has long supported an increase in staff and newer technology to enable FHA and Ginnie Mae to better serve the housing market.  We are grateful Congress authorized funding for this purpose under HERA, and now want to work with you to ensure these funds are appropriated.

“FHA faces enormous challenges in managing its programs in an ever-changing world.  It would be unfair to expect FHA to respond to the housing crisis with anything less than our full support.

“Moreover, MBA believes FHA cannot keep pace with an industry that is becoming increasingly technologically driven as long as it lacks the authority to use its revenues to invest in technology.  Improvements to FHA’s systems will allow it to more effectively manage its portfolio, thus increasing efficiencies and lowering operational costs.  Such an investment would yield savings far in excess of any initial cost.

“Second, we need to improve the quality of FHA originations.   MBA believes that an integral part of protecting the soundness of FHA is ensuring that the mortgage lenders and mortgage brokers that participate in the program and originate FHA-insured mortgages have the competence and the wherewithal to protect consumers and taxpayers from undue loss.

“MBA supports a bonding requirement for mortgage brokers to participate in the program, just as there is such a requirement for mortgage lenders.  Also, net worth requirements serve to assure that a vendor has a stake in the industry.  We believe this Committee and Congress were right to reject proposals over the last three years to lower FHA’s financial requirements.

“And finally, we continue to push for ways to reduce mortgage fraud.  As FHA endorses more and more mortgages, its insurance fund runs the risk of being exposed to higher levels of mortgage fraud.  According to the Mortgage Asset Research Institute, reports of mortgage fraud increased 45 percent in the second quarter of 2008 from the same period the previous year.

“Mr. Chairman, on behalf of MBA, we look forward to working with the Committee on our shared priorities: stabilizing the markets, helping keep families in their homes and strengthening regulation of our industry to prevent future relapses.  I know it is a little difficult for some people to believe, but I am here as the President of MBA to say that we need more and better regulation in this field.” 

Mr. Courson full written testimony can be found at www.mortgagebankers.org

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.