|HUD No. 00-7|
|Further Information:||For Release|
|In the Washington, DC area: 202/708-0685||Friday|
|Or contact your local HUD office||January 14, 2000|
STATEMENT BY FHA COMMISSIONER WILLIAM APGAR ON FANNIE MAE'S "CONSUMER BILL OF RIGHTS"
U.S. Department of Housing and Urban Development Assistant Secretary for Housing/Federal Housing Commissioner William Apgar today issued the following statement in response to a call by Fannie Mae Chairman Franklin Raines for a Mortgage Consumer Bill of Rights. According to Fannie Mae, the Bill of Rights would include greater disclosure of the process Fannie Mae uses to evaluate mortgage applications.
"HUD is pleased to see that Fannie Mae is heeding Secretary Andrew Cuomo's call for full disclosure of how mortgage funding decisions are made by the Government Sponsored Enterprises (GSEs). As the Secretary has said many times, HUD believes that all Americans who are denied access to mortgage financing have the right to know exactly why they are not being offered a loan. The formula for mortgage approval or disapproval must be clear and definable.
"Mortgage underwriters cannot, and should not, defend secret formulas or computer software programs that generate rejections or acceptances by unknown means. Fannie Mae's announcement that it intends to follow HUD-FHA's lead - announced on November 12, 1999 - in converting its automated underwriting system to a 'glass box' approach is a good first step. But releasing the basic factors used in making mortgage decisions only tells half the story. There is still a long way to go.
"Consumers and lenders still need more information from the GSEs to understand how the component parts of the automated underwriting system interact to arrive at a mortgage decision, including the relative weights of each factor. HUD will continue to use its regulatory authority to ensure consumers have full information about how mortgage decisions are made by the GSEs."