Too-tight credit has caused lenders to forego millions of mortgages and helped drive homeownership rates for minorities and millennials to record lows, Housing and Urban Development Secretary Julian Castro said.

Speaking to the Mortgage Bankers Association's annual convention in Las Vegas Monday, Castro challenged lenders to do their part to boost access to credit.

"Where do you want to be?" he asked them. "On the front lines? Or do you want to leave money on the table?"

Castro cited a March report from the Urban Institute that found 1.2 million more mortgages would have been made in 2012 alone if lenders had used credit standards from 2001, before the subprime mortgage boom.

As a result of tight credit, homeownership rates for minorities are at their lowest this century, and rates for those under 35 are the lowest they have ever been, he said.

While credit was overly loose during the boom years, "the pendulum has swung too far in the other direction," he said. At the same time, he said, communities of color will constitute three quarters of household growth formation over the next decade.

Castro said the government also has a role in boosting lending, and acknowledged lenders' frustration over regulatory uncertainty, especially in regards to the Federal Housing Administration, which has traditionally been the route for first-time, minority and low-mod income borrowers to get mortgages.

He touted HUD's new Blueprint for Access, which he said is streamlining FHA compliance by overhauling and simplifying its single-family housing policy handbook. A part of the blueprint is a supplemental performance metric, which "focuses on lender performance in the same credit score range FHA is targeting" and will be considered as a compensating factor when comparing lenders' default rates. A third blueprint tool is a loan defect taxonomy, which streamlines 99 defect codes down to nine.

"These steps should bolster your confidence in originating more loans with FHA," he told the lenders.

Borrowers are getting new tools to access FHA credit as well, he said. The agency's HAWK (Homeowners Armed With Knowledge) program will allow borrowers who receive homeownership counseling to get reduced mortgage insurance premiums which could save them at least $5,000 over the life of the loan.

The former mayor of San Antonio, who took over at HUD about three months ago, also touted a Ginnie Mae pilot program with the Federal Home Loan Bank of Chicago to help smaller institutions get the Ginnie full faith and credit guarantee on FHA, Department of Veterans Affairs, and Rural Housing Service home loans. He said he expects an expansion of this program in the first quarter of 2015.

Ginnie Mae also will help lenders feel more comfortable with making loans to veterans. Currently, VA guarantees only 25% of the loan amount. "That leaves a lot of lenders exposed," he said. But Ginnie will allow lenders to get additional insurance above the VA guarantee level.

"Reopening the doors of homeownership in America is one of the top priorities at my job at HUD" Castro said.

He added that not every sector of the real estate finance business was as gloomy as he painted single-family mortgages to be. Multifamily lending has increased, for instance.

"Homeownership must complement this," he said.

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