Senate committee vote coming on FHA reforms

WASHINGTON (9/18/07)—The Senate Committee on Banking, Housing and Urban Affairs, chaired by presidential hopeful Chris Dodd (D-Conn.), has put a vote on a Federal Housing Administration (FHA) reform bill on its agenda for Wednesday.

Although not yet formally introduced as of late Monday, the FHA Modernization Act of 2007 is expected to include a provision that would raise the insurance limit on FHA loans to $417,000 in "high-cost localities." The existing ceiling is $362, 000 for single-family houses.

The bill is also expected to reduce the down payment requirement from 3% to 1.5%, and authorize the FHA to charge risk-based premiums.

The House has already introduced similar FH A reform legislation, but that measure would allow a zero down payment option. The bill was introduced by House Financial Services Subcommittee on Housing and Community Opportunity Chairwoman Maxine Waters (D-Calif.) as a means to help mitigate the effects of the subprime crisis

The House bill, called the Expanding American Homeownership Act of 2007 (H.R. 1852), allows FHA to insure loans to those deemed less credit worthy, a provision also designed to steer mortgage seekers away from predatory lenders. The bill lowers fees for these individuals. It is scheduled for a House floor vote today.

The Credit Union National Association supports legislative efforts to empower lenders, such as credit unions, to provide homebuyers alternatives to predatory mortgage products.

Use the resource link below for more information on FHA reform proposals.

Copyright © 2008 - Credit Union National Association, Inc. All rights reserved. Reproduction is prohibited without written consent.