HUD Secretary Calls for Restoring Confidence in Mortgage Lending Practices Through FHA Modernization

Jackson stresses mortgage alternatives and ending predatory lending

HOUSTON, TX - U.S. Housing and Urban Development Secretary Alphonso Jackson today said we must increase "transparency and honesty for lending on all levels and by all lenders" at the Credit Suisse Small and Emerging Manager Private Equity Conference. Speaking to over 300 business professionals, Secretary Jackson addressed the need to modernize the Federal Housing Administration (FHA) as an alternative to the predatory lending practices that are affecting our nation's housing market today.

"We must restore confidence in lending practices, top to bottom. We can begin by exposing and ending predatory lending. There is no place for it in the housing industry or as an investment practice. Predatory lenders and mortgage fraud harm everyone in the home purchasing process, making it all the more necessary that we offer a safe FHA alternative," said Jackson.

While subprime home loans allow individuals with limited or troubled credit to become homeowners, some of these loans, which can include interest rates up to 10 percent or more, are taking a toll on too many hard working American families, often forcing them into foreclosure, noted Jackson. Last year, more than one million families lost their homes due to foreclosure, an increase of 42% from the previous year.

Secretary Jackson encouraged Congress to assist him in his efforts to combat predatory lending by passing legislation to modernize the Federal Housing Administration (FHA) The program has helped more than 34 million families become homeowners over the past 72 years, and prevented 75,000 families from losing their homes to foreclosure in Fiscal Year 2006 alone, and another 36,500 since October of last year. However, as lending practices have evolved and modernized, the FHA has been unable to do so without legislation. Reforming the critical mortgage insurance program to adapt to today's marketplace could serve as a solution to predatory lending, providing families with the opportunity to obtain a fair, safe and affordable mortgage.

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