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56 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T GOVERNMENT THE LATEST The FHA Can Increase Credit Access While the GSEs already offer attainable credit access, the Urban Institute says FHA has room for improvement. H igh credit standards have reduced access to credit, according to a blog post by Lau - rie Goodman from the Urban Institute. If 2001 credit standards were still in effect, 6.3 million more loans would have been made since 2009, and as many as 1.1 million more would have been made in 2015, according to Goodman. The Urban Institute stated that lenders are imposing even more stringent standards than those required by the entities that guarantee or insure these loans: Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA). While these institutions have been successful in reassur - ing lenders that they will only be liable for underwriting errors and not whether the borrower defaults, originators still drive business away with concern that the costs of producing and servicing risky mortgages are higher than what they could earn on the mortgage. The GSEs and their regula - tor, the Federal Housing Finance Agency, have clarified when lenders will be held accountable for defects, as well as defined the penalty for specific defect types; and it has been more success - ful in this clarification than the FHA, according to Goodman. Additionally, the GSEs moved the loan review process up to shortly after acquisition, so that lenders can know immediately if defects are identified. According to Urban Institute, the FHA has more power to increase credit access. The GSEs do risk-based pricing through their loan-level pricing adjustments. However, the FHA does not do risk-based pricing, and so it has insured borrowers with less-than- pristine credit. Charging the same fee for those with good credit as those with bad credit has limited credit availabil - ity. GSE mortgages with a down payment of less than 20 percent of the loan amount must also obtain private mortgage insurance, which varies in price depending on risk. FHA loans are therefore much more attractive for borrowers with low credit scores. The Department of Justice Changed Its Tune; What Now? The Justice Department ruled the current structure of the CFPB is unconstitutional and supported the president's right to remove the director at will. T he U.S Department of Justice (DOJ) turned against the Consumer Fi- nancial Protection Bureau (CFPB) in mid-March, as the DOJ formally announced its support of PHH Corp. in the case against the CFPB. The ongoing case and brief published by the DOJ declared the CFPB leadership system unconstitutional, as the bureau's single-director structure is in vio - lation of the Constitution's separa- tion of powers clause. The 33-page brief from the DOJ focuses largely on President Trump's power to replace the CFPB director. "Limitations on the president's authority to remove a single agency head are a recent development to which the executive branch has consistently objected," the Justice Department's brief said. "Under the Constitution and Supreme Court precedent, the general rule is that the president must have authority to remove executive branch agency heads at will." With the new Republican administration, the Justice Department's opinion on the Bureau has shifted. "Because a single agency head is unchecked by the constraints of group decision-making among members appointed by different presi - dents, there is a greater risk that an 'independent' agency headed by a single person will engage in extreme departures from the president's executive policy." The Wall Street Journal reported that Justice Department lawyers have argued that the current struc - ture of the CFPB is problematic, as it allows the President to remove the director only for negligence or malfeasance. The brief stated that, instead, the president can remove the director at will. "As this court recognized in call - ing for views of the United States on the question whether rehearing should be granted, the view of the United States on matters involving the president's removal of power are not always congruent with the views of independent agencies," a previous government motion stated. "No other executive agency is so insulated from democratic accountability," wrote Brian Melendez, a Managing Partner at Dykema Gossett, representing the Association of Credit and Collection Professionals, a trade group for debt collectors. Representative Jeb Hensarling stated, "I applaud the Department of Justice for recognizing this unconstitutional CFPB must not stand and must not continue to harm the very consumers it is supposed to protect." Previously, Hensarling called the Bureau "arguably the most powerful and least accountable bureaucracy in American history." Of course, not all groups agree with the decision to defend the president's power. Allied Progress released the following statement from its Executive Director, Karl Frisch: "Millions of Americans have felt the impact of Richard Cordray's work as the Consumer Bureau's director. Under his leadership, the CFPB has returned nearly $12 billion to 27 mil - lion Americans who have been wronged by credit card compa- nies, payday lenders, debt collec- tors and other predatory financial industries. Director Cordray's work is a cause for celebration, not dismissal."