Washington, D.C. — At a House Financial Services Committee hearing on the Federal Housing Administration, or FHA, on Wednesday, Rep. Scott Garrett (R-NJ) used a quote from a Center for American Progress report to support his assertion that the FHA engages in predatory lending. In response, Julia Gordon, Director of Housing Finance and Policy at CAP, issued the following statement:
FHA loans are fully underwritten and consist largely of long-term, fixed-rate mortgages designed to succeed—in stark contrast to the risky, expensive, no-doc loans push-marketed by private lenders and securitized by Wall Street during the height of the housing bubble. FHA’s core business model of sustainable, low-down-payment lending has helped to build America’s middle class and, particularly at times when other sources of credit dry up, plays a crucial role in meeting the credit needs of first-time homebuyers, low-wealth borrowers, and borrowers of color.
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