Ability of f age a borrowers to utilize down payment assistance programs from governmental entities to porters a home and it has indicated that it began and intends to issue the proposed rule government down payment assistance in january secretary constant sin testify before this committee in june that he was not, with the hood they will identify which Government Entity is providing this assistant, appears that they cannot determine which Government Program will be providing this payment assistance, or any loan, which is critical, before attempting the issue, new regulations of government, to help the payment system, will you commit to not moving forward with any move, other changes related to down payment assistance provided that governmental entity, is able to collect data on intergovernmental entities and to analyze this typically, on the performance and of age let loans and, down payment of each specific governmental kentucky, can you expand on that . Thank you mister chairman, as you know down payment assistance has a long history that if aj when i was commissioner last time, western type of down payment assistance ultimately costs fha more than 60 and a half billion dollars in losses. You say 16 or 60 . 16 and a half billion dollars in losses. Anna dowdy amid assistance, tell me how that works . Sir this type of down payment assistance which is no longer permitted actually put the down payment on the mortgage so while he was totally got a gift it was given to him paying, for so it was almost five times okay, mister administration, down payment assistance is normally used to help first time home buyers are those who qualify and that matter to help them get into a hall. Its not a significant amount but it closes the gap to get cheaper loans, so tell me what the problem is . I just want to make sure that any down payment assistant providers where rules permit whether it is jurisdictional, whether the financial benefit of the transaction doesnt permit, so i will say that any effort to undertake rulemaking will be deliberately, stone, and facts as we know it. We just want to make sure that it is done in the best interest of the borrower and not there to emerge people who were providing it. I agree totally with that perspective, it should be done in the interests of the border and you and i know that he goes to close the Home Ownership gap and there are other benefits to the so i would hope that we can reach some kind of combination would back up any decision made by the department. Let me ask you, one of the first actions of the Trump Administration took was to suspend a plan reduction and fha annual premiums, which wouldve saved every four or 500,000. He responds to calls from advocates who allow this to be implemented in light of the fha improved financial help, secretary carson stated that he would keep the rate as low as he could, consisting with the law but since then secretary not only maintained the suspension on premium reduction if proposed arbitrarily increase the capital ratio far above what it was required so secretary congress install stand by his original statement he will keep premiums as low as possible consisting with the law . Thank you mister chairman in many ways i want to 1. 4 trillion dollar corporation, i have to carefully manage our cash inflows, we consistently look at a premium infrastructure whether its hard to say this one is too much richer little, we are looking, we have the rate structure in terms of what is on the affront or how much is on the annual. Its something that we can sustain that look at and will continue to do through this first term. All right i thank you for your responses, i know you need five minutes to my colleagues. Thank you mister chairman i want to thank you for holding this, hearing its very important, i think theres a number of issues that i want to eliminate and work on. Commissioner thank you for being here i appreciate your service in three administrations, two republican and one democrat, the to you for to shore of the fha insurance funds you made a 2 statutory capital requirement, that is very important, its already not a lot of money but that is the minimum requirement and i appreciate you getting it there and keeping it there, it is a great accomplishment something ive been concerned about for a long time. I have mentioned a couple of things it like to follow up on, the first thing i talked about was whether you might be able to work with the chairman and i and stakeholders to address the disparity and Home Ownership of race, is that something you might be willing to work with us on . Absolutely sir we have a total working group on this several months ago, minority homeownership because you articulated her statement it is valid. I think the chairman mentioned the statistics in his Opening Statement, obviously that disparity is too great and it leads to a disparity in wealth as well because its the biggest Savings Vehicle most people have, so i want to thank you for your willingness to work with us and we look forward to working on that topic, its very important talk because the American Dream needs to be accessible by every american, its something all of us believe, its something that you believe and we want to Work Together to find a way to figure out what is driving that disparity and figure out how to address that disparity so i really appreciate that common sense approach, we look forward to working with you on that. The second thing i mentioned was the fact that one size fits all premiums, it isnt give a risk based discount that are good for people with lower risk. Are you willing to work with us and potentially stakeholders and people in the private sector given that governments history of miss pricing risk i think theres a lot of private sector, you know, Mortgage Insurance Companies and others that could help. A partnership with you as we try to figure this, out is that something you be willing to work with us and maybe some outside private entities to figure out if we can find a way to do Something Like that to make sure that people who deserve a bit of a break at a break even if we limit that break . Absolutely sir i think you fear question, we just want to make sure not intruding on private capital as you know there are private mortgage insurance that work with us. Everything they can be part of this, they have very elaborate systems today doesnt one of the other things that i didnt mention, we talked about privately im so happy that Congress Gave a 20 Million Dollars of down payment to update your i. T. Infrastructure, i understand youre now using so that is a star but id really like it to be more modern than that. I know that we need to work to make sure we give you the resources you need to upgrade that and chairman and i had a side that we acknowledged we need to help you investigate investor Near Technology and you can turn or some outside industry that havent data and computing systems to help you as you do this, including our private margin enters, theres no reason you need to compete against them when you can actually work with the private industry. Is that something in the open to . Absolutely there are certain things are prohibited to do but a great thing about statutes is we can change it, so absolutely we are certainly open to that. We are very thankful for the down payment on our technology upgrades, this is something i try to get to the commissioner last time in the Previous Administration so we are very happy that congress got us on that, the good trajectory to get to a better place in our technology. Thank you it is onedimensional another part of it, much maligned to talk about it for a minute because where you guys have done to make this work and their First Mortgages or not for everyone but just because theyre not for everybody doesnt mean theyre not for anybody, i want to give you a second to talk about what youve done to help make sure those programs have the right guardrails to protect Senior Citizens but also are there for people who might need cash flow and have that saving vehicle i talk about other hall. Well the Program Provides a motion, its not for every particular scene here it depends on their situation but it is obviously like a lot of things impacted by the housing collapse, it seemed to be the very top of the apathy one in terms of volume when it came down, the program was impacted by that and the Previous Administration made some headway in dealing with this, working with congress for the reverse mortgage stabilization act, and good house price appreciation and some other changes that we mean seem to be having a much better place than we were last year and as being able to help senior and ways. The gentleman from texas, mr. Green who is also the chair for the subcommittee on oversight and investigations it is rex recognized for five minutes. Thank you mister chairman and i think the witnesses for appearing it is good to see you again i am concerned about the role of expanding access to homeownership as well and its good to hear that the chairman and Ranking Member are working in this area. One of the things that we have been looking at is additional credit scoring some code alternative credit scoring have you in intelligence on this anything theyve been doing and how some might be a benefit. Thank you i appreciate that. We dont know what to do with all trade of trade lies and it struck me at the time and still today that if we were to do a Pilot Program looking at that it would be the appropriate place to conduct that Pilot Technology as we have substantially and there are more players in the industry and we look at these statistics 25 to 35 million americans either have low credit score more than for credit and i think that i wanted them to have data to pack it up and i think there is a way to look responsibly and in the best interest of borrowers to look at nontraditional credit in ways that might open the apertures. Well those who may not understand the term nontraditional credit will you can give us some explanation. Please well there are several different models out there there. Is Something Like a traditional Credit Credit cards, auto loans, and things of that nature, and scores im a little differently than other. Subjects of this that look at civil foreign bills, utility payments, rent payments, things of that nature and the fact is that your payment in two into your pastry into that is why. Theres someone little of all that but. Again i dont have all the answers today. I just think the prisoner approach would be to conduct a pilot and see where that would take out. We just you know sir was put into here in 2008 but for whatever reason the pilot was never implemented. And the authorization right out. I do recall that was legislation that had i had the good fortune to punch sponsor. And you dont work with me. As you know, we have tried to maintain the traditional model and only add Additional Information, Additional Information about the lights phone water cable. And i have to continually emphasize we dont decide that we are going to eliminate the traditional model. All of that states there but there are some people that benefit from having a rich payment history in these other areas. And that helps them. I find it interesting to note that at yesterdays hearing, we had representatives from five agencies here, including the fed, fdic, actually it was three icc wasnt present. And they had to join communicate where they have indicated that this is Something Worthy of consideration, so it looks like we are moving in that direction. Its just a question of how long will it take us to have that Pilot Program that you are talking about. And i am working with my friends on the other side to see if we can collaborate and come to some reasonable conclusion as to how to move forward with this. Would you just respond to the notion of maintaining the traditional model and simply adding additional credits this is why i say additional as opposed to alternative, because it causes some people to believe that we are going to forego the traditional model, and that is not at all what we are talking about your. Comments please . Sure. Again, i think sir, there is a way to do it. I think we both agree should be done responsibly and in the bombers best interest. But remember that will be a two way street. So where as you may have good payment history in some of those non traditional tree lights, if you also begin to paint light, you are going to feel that as well. It is no different than if you pay your credit card bill late or make your automobile payment late as well. So again i just want to make sure that the committee understands that if we work to do it, we think we should look it in the ways that are in the best interests of the computer consumer and done responsibility and it strikes me is that if they do would be the appropriate vehicle just. Thank you. You and i have talked before. Why dont we have an additional conversation on this when time is up now. Lets have my stuff gets with your so we can make an appointment at flush the stock. Yes sir. I would be happy to. Thank you. Thank you. I yield back secure. The gentlemans time has expired. The gentleman from missouri mr. , local meyer, is recognized for five minutes. Thank you mister chairman. Welcome mr. Commissioner montgomery. I want to start off with questions regard to the false claims act. Memorandums of understanding, an mou was announced between the department of justice on the use of the false claims act, and im curious. Do you give me some details on this what do you hope to accomplish and how big a barrier is snowfall stage act, and what do you hope the mou how it will affect your mortgage or just and make them more acceptable . To tell you help us . And thank you sir. When i was commissioner last time we had a good balance between the percentage offers lender steadier depositories and not depository. We are out balance now by 13 . In originate sure burn off the outcome from deposit george. But the recently has 20 generous about how. Most of them they point to the false claim act as the recent they got out of the ethics program. Some of them got out off the va program. Its not my intent to say take sides on the argument between independent lenders and depository. I just think for a lot of reasons we need to fight equilibrium there. I also think that in a lot of consumer advocate groups agree with me are disappointed. They see this as an access to credit issue. A lot of families to have banking relationships and a large depository our first time home buyers are finding that their depository doesnt offer the age, which is the nations flagship Home Buying Program since 1935. To me that just seems a little odd. Its not to say that we look at the other way with fraud or people that dont follow our rules, quite the contrary. We just think somewhere between an indemnification and the equivalent of a drone strike on the land or, in this case they just got out of the program, there needs to be something in between. And the Justice Department working rather general counsel, our staff, we found a good place and we think it brings a little more focus to the program because fha and hard. The the bigger voice im saying okay this right is to the level of the false claim act and therefore we werent record rundown concur with justice going forward. I just want to go to the 13 from depositing institutions that the other 87 would be from independence . Yes sir. Credit unions. Credit unions, they are depositories. They would fall under the depository. Independent would be what, the quick loans in the world . Is that what you are talking about . Yes or. Some are privately owned, some are publicly traded. Online lenders and offshore and all that kind of stuff. Well you have to be approved obviously you have to be we have a. Dozen amazing statistic. It took me by surprise here. I was not prepared for that. While we were just happy to allow the consumer groups for responsible learning blending, ncrc and others were on our side on the spot it. Thank you. I appreciate your explaining sat. Also with regards to the risk in your portfolio, obviously things are going well. Increasing the capital account. But we have noticed that the Credit Scores seems to be going backward. There have been some early default on debt intern ratios are rising. Should we asked congress to be concerned about that . What are we doing to address that . Its not just the nature of the economy . What is going on there, because. I will try to ball down an hourlong response but sir we conduct daily stress tests on your portfolio. And we have been concerned about the number of loans that come in with risk layering, which is a combination of high debt to income ratio, so Credit Scores, and zones that came in from about august of 2016, up until we made the change in the total scorecard, we are modeled at about 1. 4 capital ratio lost and. Thats not where we want to be. Congress requires us to have a minimum 2 . So we made some changes to the total scorecards that went into effect in march of this year. It seemed to be having their intended effect. It seems like we have stopped the three years flight in Credit Scores. They have actually leveled off and improved one point. I want to make one more quick question. Before my time is. Up the concern is that you know you have got you are well capitalized right now and you have more risk in your portfolio than you would normally have. So you already have been able to accommodate more risk you have to have more capital to be a solvent entity and reserve stick to write this out until you get this portfolio back in shape i would assume. How long do you think its going to take to do that . Well certainly the house price appreciation helps in a stronger economy. Again we just want to make sure we call it turning the ball. We want to make sure we have access to credit. We want to make sure that should there be a downturn we have ample amount of reserves to whether that. Thank you. Sir a tricky dust but we think we are managing it well. We will be watching. Thank you very much. I appreciate. The gentlemans time has. Expired the gentle of foreign from higher. Mr. Ax is recognized for five minutes. Thank you chairman and thank you commissioner montgomery for being here. Very much appreciate. It we have been talking a lot today about increasing homeownership and addressing to short of charles affordable who shot housing across this country. So one of the issues i want to take a look at is manufactured housing. Because in many cases that can cost 30 to 30 less and sometimes more for folks to be able to afford that. So if we are going to talk about it though we, have to make sure its a way to provide Affordable Housing and truly make sure that it is. I dont know if you are aware of what has occurred in iowa over the last year or so but i would love to give you a brief background. Unfortunately, a Company Named haven park capital, which is a fund from utah, has bought no seven manufactured Housing Communities in iowa and it then they proceeded to raise the lot rents for the residents there between 20 and 70 . So they came in and just raised the rate 20 to 70 for the families, many of whom are on fixed incomes. I visited one of those communities, midwest Country Estates in wacky, and so first time the terrible position that these folks are being put in. And just yesterday i spoke to one of those residents, matt chapman, who is about to be pretty 70 office the income for housing. We know the standard definition of severely cost urgent is saying 50 of your income on rent. And here is a constituent who owns his home outright, has no mortgage, and has to pay 20 more than 50 that we think is severely cost burden. So he doesnt know what he is going to do and many off his neighbors just dont know how they are going to make this happen. It is just simply unaffordable for so many residents like him and i just across the country. Many of these properties were purchased with federally supported loans. So we need to make sure that our constituents are being taken advantage of because they cant relocate. And these are the kind of predatory practices that unfortunately are allowed to continue. So i would love to ask you, commissioner, i have been working to find solutions to prevent this happening again and given your experience in housing i just wanted to ask you what recommendations do you have that we should be putting in place . And i would be happy by the way to follow up. We have more and more time to discuss it but manufactured housing is 22 million americans live in manufactured housing. We regulate the construction of manufactured housing and throughout the country. Between my time mission a last time and this time, the technology, the construction standards and all that have made leaps and bounds, so much we are almost having a hard time keeping up with it we. Have also been looking at the financing aspect relative to fha where there is title i and title to without getting to into the weeds here. Title i doesnt have a lot of volume in it. It needs to be more of what i call the chancellor loans for just a traditional fha title do. We think there is a way to make it more affordable because inaudible from your Opening Statement the average income of a manufactured homeowners screen 30 and 50,000 dollars a year. Again its part of the things we are looking at and sort of a pro consumer aspect, way things we can perhaps get some of the cost of financing down. We have less purdue to be honest with you on the structure off communities. Again more so its a regulation of the actual manufacturing offered off the structure. Okay. Well i appreciate that and i would love to see what information you have. At least three of these seven properties were bought with family loans. Its not as if the federal government is not involved in it. We believe that they actually overlaid over paid as well for the queen beat that down is talking with you about. I am sure they did. And i think that we could have if we had pieces in place they could have possibly purchased it for themselves and been able to stay in their homes are not just to afford when we see these kinds of predatory actions they are asking children to literally give up their dogs because they are too big for the homes according to their new rules. They are forcing families to tear down swing sets. That they dont think are i guess goodlooking enough but these arent people who can know for those 2000, 3000 dollar rainbow set studs some other people can. So any help that you can give us, these people truly have been put in a position where they dont know what their answer will be. Many off them will not be able to afford this and will be forced out off their homes, including taking their children with them, and not being able to find a affordable option. So i appreciate your followup on some of these things we talked about at some in the other things you think we can put in place. Absolutely, i look forward to following up with you and your staff. Thank you. Thank you. The gentlewoman yields back and the gentleman from colorado, mr. Tipin is recognized. For five. Minutes thank you mister chairman and commissioner, welcome. The fhas recent report to congress showed that the faas Financial Health is just about the just but shape it has been in to find out what creates this. I appreciate your stewardship on that. If you want to follow up on some potential areas that could impact that. And i would like to be able to talk about the Property Assessed Clean Energy loans. These loans have been used in some cases to be able to trick some seniors and other political citizens they taking out a high interest and are g. Loans for green under three appliances in their homes as collateral. In some cases it does actually squeezed the americans to the point of foreclosure. Do you believe that the use of