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In its letter, Community Home Lenders of America (CHLA) urged federal agencies – Federal Housing Finance Agency (FHFA); US Department of Housing and Urban Development (HUD); Rural Housing Service (RHS); and the US Department of Veterans Affairs (VA) – to take steps to mitigate potential adverse effects to minorities, veterans and other underserved populations.
Mortgage Professional America spoke to the executive director of CHLA, Scott Olson (pictured), for further insight. CHLA is a national nonprofit association of small- and mid-size community-based mortgage lenders aimed at promoting fair treatment in the way of federal mortgage programs, rules and regulations. The group estimates the lenders it represents originate three-quarters of all mortgage loans.
Asked how the litigation might be detrimental to underserved populations, he began with close to home hypothetical scenarios to illustrate the CHLA’s premise.
“Now if my son or daughter who I hope someday want to buy a home – and they’re scraping together the money for a down payment, to qualify under the loan programs where they have LTV and down payment requirements – now instead of the sales price reflecting 6% brokerage, the broker’s fee is going to have to be paid for by the buyer,” Olson said during a telephone interview. “Where are they coming up with that? It’s tight enough to begin with. Another 3% on a $500,000 house is not an insignificant amount of money.”
He correlated the hypothetical example to the premise of the CHLA’s letter to federal agencies: “It’s first-time homebuyers – people getting high LTV loans – that this is going to make a difference for. That’s why we singled out underserved borrowers. Veterans, because the VA program is 100% down. But it does seem that under the existing rules, this is particularly going to be a problem. This is why we singled out these categories.”
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