FHA Commissioner Gordon told Realtors that a recent 30-basis point insurance reduction makes FHA loans cheaper, including its 203(k) rehab option and ADUs.
WASHINGTON – Housing supply is one of the greatest factors impacting affordability in today’s market, according to speakers at the Regulatory Issues Forum at the 2023 Realtors® Legislative Meetings.
Federal Housing Administration (FHA) Commissioner Julia Gordon, keynote speaker, focused on regulatory policy concerns important to the real estate industry. In addition to other things, she addressed recent FHA action, including the recent 30-basis point reduction to annual mortgage insurance premiums. That reduction, she said, applies to FHA loans, its 203(k) program that rolls the cost of home improvements into a first mortgage, and lending for Accessory Dwelling Units (ADUs).
“The issues that Realtors are discussing are what we spend our time on at FHA, too,” said Gordon, including “serious inventory shortages, a radically altered interest rate environment, liquidity challenges that affect the entire housing ecosystem. Everything I’ve just mentioned constrains the ability of all households to buy a home, but no one is more affected by these difficulties than the low- and moderate-income families that FHA serves.”
More than 82% of FHA borrowers this year are first-time homebuyers, she said, noting that the FHA program serves “the people who are getting their foot on that first rung of the homeownership ladder.
“We’re going to continue to work with NAR (National Association of Realtors®) and with all of you to enhance the opportunity to partner with FHA,” Gordon said. “That includes factors in the President’s budget proposal – $10 billion for first-generation down payment assistance and funding to increase availability for FHA mortgages for lower-priced homes.
“Every American who buys a home should have the same opportunities to build generational wealth,” Gordon said.
After Gordon’s remarks, Bryan Greene, NAR’s vice president of policy advocacy, joined her on stage for a Q&A that touched on the current housing supply problem, FHA’s functions under HUD and the 30-basis point reduction to the annual mortgage insurance premiums.
“We don’t have the opportunity to do quite as much directly to build as we do on the multifamily side,” said Gordon, who expects “foreclosures to tip up somewhat following the pandemic because there was a moratorium for so long.”
Gordon also noted NAR’s increasing concern with institutional investors, saying when a home goes up for sale or foreclosure, “We decide to sell it to a new owner occupant and not to some investor that’s just going to turn it into a rental.”
Greene ended the conversation by asking Gordon what she hopes to accomplish in the next year at FHA and how NAR can help.
“The thing I need your help with most is dispelling myths about FHA mortgages and making sure FHA mortgages are not discriminated against by sellers,” Gordon replied.
Artificial intelligence and emerging technology
In the second portion of the event, a panel of real estate technology experts discussed the benefits and challenges of artificial intelligence (AI), as well as how emerging technology can benefit real estate professionals and clients.
Sherrell Dorsey, founder and CEO of The Plug, started the discussion with the burning question, “What does AI, like ChatGPT, mean for the real estate industry?”
“AI is computer systems that perform tasks or functions that normally require human intelligence,” said Rachel Kim, copyright counsel at Copyright Alliance. “In terms of its use in the real estate space, ChatGPT is writing property descriptions, and then you also have different image generators out there.” She says those serve as “imagination tools.”
The panel agreed that AI can transform the real estate industry by making it more efficient, and, as the technology continues to evolve, brokers and agents can expect to see even more uses of AI in real estate.
All panelists agreed that transparency about the inner workings – where the information was gathered and the creation of AI tools – would help the public in their AI choice decisions.
Dorsey then asked the panelists if the government should play a role in AI.
“There are things we can do without new laws,” said Catherine Bracy, co-founder & CEO of TechEquity Collaborative. “Things around the edges, make the tools more transparent – ensuring you are not violating fair housing laws. Everyone will have to make their own ethical decision on how to use this.”
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