PREPARED REMARKS FOR
BRIAN MONTGOMERY, FHA COMMISSIONER
MINNEAPOLIS, MN
WEDNESDAY, JUNE 25, 2008

Thank you, Mike (Haley, Minnesota Housing Finance Agency). Good morning, ladies and gentlemen. I am very pleased to be here with you today to sign this Memorandum of Understanding (MOU). This MOU is a landmark, a unique blueprint for cooperative action. It is a framework for a closer working relationship between the Federal Housing Administration (FHA) and the Minnesota Housing Finance Agency.

For many years people in the industry and in state government have expressed the need for a clear, mutually-agreed upon Memorandum of Understanding between FHA and states for the financing of single family properties. Today, we have such an agreement with the State of Minnesota. This is a groundbreaking accord, the first of its kind in the United States.

The MOU is timely. As you know, we face a turbulent housing market. It is amazing how quickly the market changed here in Minnesota and in other states, from a surging, dynamic rate of increased homeownership in the first half of the decade, to a much slower, difficult market in the last two years.

But whether the market is up or down, we have an obligation to do everything possible to help people to buy a home they can afford or to keep the home they already have.

So even during times of historic prosperity in the United States we needed this MOU.

Now, in a time of crisis in the housing market, such an agreement is imperative. This MOU will help people in need right now by harmonizing the work of FHA and state housing finance agencies, and by making FHA loans more available to qualified borrowers.

How does it do this? Well, this MOU will help increase focus on financial literacy and housing counseling. We find that many people have the right home, but the wrong mortgage. One simple and common sense answer is to get pre-purchase housing counseling, well before buying a home.

We know that housing counseling works. People need help to understand their mortgages and the terms of their contract. As many as half of the people in foreclosure did not read or understand their contracts. They just signed on the dotted line.

We can address this problem, and address it powerfully through housing counseling. We know that about 97 percent of those who completed our housing counseling program with a HUD-approved housing counselor avoided foreclosure in 2007. That is powerful evidence about the difference that housing counseling can make.

Another reason for the MOU is to provide a clearer understanding of FHA availability. For those who have subprime loans that have turned into �suicide loans,� the President expanded FHA's role with the creation of FHASecure.

For those in trouble solely because of market turbulence, FHA is reaching out. Through FHASecure, we have already refinanced approximately 250,000 loans since September 2007, and on July 14th we will expand FHA's role even further to help those who have trouble because of certain types of temporary financial setbacks. This will enable us to reach an estimated additional 250,000 more families by the end of this year.

If Congress would send an appropriate FHA Modernization bill to the President's desk, we can help even more people in trouble.

Housing finance agencies are an important part of our national response. It is through the great assistance of housing finance agencies nationwide that we, together, will be able to help many more borrowers in need.

To do so, we have agreed to standardize all mortgage underwriting rules with FHA requirements.

We will also initiate a joint outreach and education plan. We want lenders to be fully trained to provide FHA loans.

We will work together to provide housing counseling and consumer education.

State housing finance agencies will now be able to use FHA logos for co-branding purposes.

FHA will assign an account liaison to work in unison with HFA's across the country.

And the FHA will work with the Department of Housing and Urban Development's regional office staff and field office staff to implement this MOU.

I always enjoy coming to Minnesota. It is a state with such a rich cultural and political heritage. I am a student of history�I hope we all look back in order to look forward. A few years ago a political journal (Daedalus) devoted an entire issue to the State of Minnesota. This is a state that often explores new territory. It has been called the �nation's political laboratory.�

Well, today we add to that history in our own way. Starting today, together, we move forward, into new territory, with this MOU. It is the right thing, at the right time, and, simply, the smart thing, to do. It puts us on the same page, with the same goals, in a total working partnership.

And I believe that the rest of the nation will follow this action and state housing finance agencies will duplicate this MOU, state by state, one after another, looking back to the Minnesota Housing Finance Agency for inspiration and guidance.

Thank you for being the first state to sign this MOU with us, and thank you for inviting me here to participate in this great event.

Thank you.

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