Industry NewsMortgage

House votes for boost in FHA staff, tech

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The House has approved legislation that could allow the Federal Housing Administration to hire additional staff and upgrade its technology to handle increased demand for its mortgage guarantees and combat fraud and lax underwriting.HR 3146, the 21st Century FHA Housing Act of 2009, is a response to fears that increased demand for FHA-backed loans is taxing the FHA's capabilities to oversee lenders, making the program more vulnerable to unnecessary losses.With the demise of "private label" subprime lenders, the number of FHA-approved lenders grew more than fivefold in two years, from 692 at the end of September 2006 to 3,300 two years later, Kenneth Donohue, inspector general of the Department of Housing and Urban Development, testified at a Congressional hearing this summer (see story)."The integrity and reliability of this crop of program loan originators is, in our view, unproven, and in light of the aggressive recent history of this industry, may pose a risk to the pr...