HUD issues mortgage underwriting rules favoring temporary foreign workers – press enterprise
At the quiet dawn ahead of Memorial Day weekend, the US Department of Housing and Urban Development asked US mortgage lenders FHA to lower the underwriting bar for H-1B visa holders.
To qualify for a Federal Housing Administration loan, these temporary foreign workers in specialized occupations must have at least one year of work experience in the United States.
But if you’re a U.S. citizen or U.S. permanent resident (green card holder), the two-year minimum still applies.
I think the intimidating homeownership battle would put citizens and legal residents first and certainly at the forefront. This new policy does not. This potentially places citizens and permanent residents in the back of the bus.
It offers a distinct advantage for foreign workers to have a head start over US citizens and US permanent residents with short or irregular work histories. And, this will create more competition for buying homes.
As of September 30, 2019, according to the latest data available, the number of people authorized to work on an H-1B visa was 583,420 people, according to the United States Department of Homeland Security.
Why does the HUD provide an easier route to home ownership for H1-B visa holders at the expense of permanent residents?
A spokesperson for HUD said the action is in line with the “Biden administration and HUD strategy to expand access to affordable mortgage credit to all low to moderate income individuals and families, especially those of underserved communities “.
It rings hollow to say that H-1B visa holders are underserved. In my decades of mortgage granting, I have never once applied for a loan from an H-1B visa holder who was not a high-level, highly paid worker, such as a engineer or software developer.
FHA financing is always a big deal in getting people on the path to homeownership. According to Attom Data Solutions, lenders nationwide have issued an average of 1.1 million FHA mortgages per year over the past five years, with 125,000 California borrowers obtaining FHA financing per year.
FHA funding was used in nearly 10% of all purchases in Los Angeles County, 5.7% in Orange County, over 20% in Riverside County, and nearly 21.5% in the San Bernardino County.
“It just doesn’t make sense,” said Dave Stevens, FHA commissioner under President Obama. “If I were a commissioner, I would change the policy to make it consistent or better” for citizens and green card holders.
Stevens also questioned whether HUD had performed a default risk analysis.
“There is a risk that taxpayers will support mortgage loan programs for workers who can theoretically lose their jobs and be kicked out of the country,” Stevens said.
A senior industry executive told me on condition of anonymity that HUD is in turmoil as many vacancies left by officials in the Trump administration initially have yet to be filled.
“The righteous social warriors have taken over and are trying to make up for lost time,” he said.
Another perspective comes from outside the industry.
“Is there a rational distinction between groups? Is there a labor shortage? It is not unfair or discriminatory if there was a rational and legitimate public purpose, ”said Michael Josephson, Founder, CEO and President of the Josephson Institute of Ethics. “However, they must be transparent about this. Everything the government does should be subject to public accountability. “
I wonder if this is just a public policy error that will be corrected quickly. Or is this the start of a slippery slope in housing policy where more unequal policies become the rule of law?
Freddie Mac Rate News: The 30-year fixed rate averaged 2.99%, 4 basis points higher than last week. The 15-year fixed rate averaged 2.27%, unchanged from last week.
The Mortgage Bankers Association reported a 4% drop in mortgage application volume from the previous week.
At the end of the line : Assuming a borrower gets the 30-year average fixed rate on a compliant loan of $ 548,250, last year’s payment was $ 57 more than this week’s payment of $ 2,308.
What I see: Locally, well-qualified borrowers can obtain the following fixed rate mortgages with a cost of 1 point: a 30-year FHA at 2.25%, a 15-year conventional at 1.99%, a 30-year conventional at 2.625%, a 15- a conventional one-year high balance ($ 548,251 to $ 822,375) at 2.125%, a 30-year conventional high balance at 2.875% and a 30-year fixed jumbo at 2.875%.
Eye-catcher loan of the week: A 20-year set at 2.75% without points.
Jeff Lazerson is a mortgage broker. He can be reached at 949-334-2424 or [email protected] Its website is www.mortgagegrader.com.