For Immediate Release:
Contact: Steve Adamske (202)
225-7141
or Heather Wong (202) 226-3314
September 18, 2007
House Passes Comprehensive
FHA Reform
Washington, DC – The U.S. House of Representatives today
overwhelmingly passed H.R. 1852, the “Expanding American Homeownership Act
of 2007,” which will revitalize the Federal Housing Administration (FHA), a
federally insured loan program that for over 60 years has been a reliable
source of affordable fixed rate mortgage loans, especially for first-time
homebuyers. The measure, originally introduced by Representative Maxine
Waters, Chairwoman of the Subcommittee on Housing and Community Opportunity,
and Barney Frank, Chairman of the Financial Services Committee,
will enable FHA to serve more subprime borrowers at affordable
rates and terms, recapture borrowers that have turned to predatory loans in
recent years, and offer refinancing loan opportunities to borrowers
struggling to meet their mortgage payments in the midst of the current
turbulent mortgage markets.
“There
is an affordable housing crisis in America. In recent months, that crisis
has exploded beyond the poorest renters and homeowners, to threaten the
domestic economy. H.R. 1852 is a necessary step in walking us back from the
brink and in the direction of meeting the housing needs of all Americans,”
said Chairwoman Waters.
“A revitalized FHA program will
help future homeowners realize the dream of home ownership, and will prevent
many first time and inexperienced home buyers from being pushed into loans
that are unaffordable or difficult to understand,” said Chairman Frank.
“The bill we passed today will help people all across America because we
have enacted provisions to allow the FHA to insure loans in high cost
areas.”
Specifically, the bill includes the following important provisions:
-
Lower Down Payments.
Authorizes zero and lower down payment loans for borrowers that can afford
mortgage payments, but lack the cash for a required down payment.
-
Housing Counseling.
Authorizes more than double the current funding level
for housing counseling, to help subprime homebuyers and borrowers late on
mortgage loan payments.
-
Subprime borrowers.
Directs FHA to provide mortgage loans to higher risk
(but qualified) borrowers, without authorizing unnecessary fee hikes on
such borrowers.
-
Reverse Mortgages.
Enhances the FHA reverse mortgage loan program to help
seniors pay for health and other expenses, by removing the loan cap to
avoid program shutdowns, raising loan limits, and by reducing the maximum
fee lenders can charge for these loans.
-
Multifamily Loans.
Raises FHA multifamily loan limits, so these loans can fully fund
construction costs in high cost areas, and enhances sale of foreclosed FHA
rental housing loans to localities, so that affordable housing can be
maintained in local communities.
-
Affordable Housing Fund.
Authorizes up to $300 million a year from the bill’s excess profits for
affordable housing, instead of returning such funds to the General
Treasury.
-
Higher Loan Limits.
Adopts the Frank/Miller/Cardoza amendment that would
raise FHA single family loan limits, which now bar loans above 95% of the
median home price in each local area and shut FHA out of higher cost home
markets. The amendment raises the FHA loan limit in each area to the
lower of (a) 125% of the local area median home price or (b) 175% of the
national GSE conforming loan limit. The amendment also retains the bill’s
provision for a nationwide FHA loan floor of 65% of the GSE conforming
loan limit, and gives HUD authority to raise these loan limit amounts by
up to $100,000 “if market conditions warrant.”
In
addition, the House adopted an amendment to the bill to direct FHA to make
available refinancing loans to existing qualified homeowners who are in
default or at risk of default due to rate resets or mortgage market
conditions, and to authorize lower down payments for such purpose. The
amendment also includes provisions to address problems arising from inflated
appraisals.
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