Tuesday, December 18, 2007

FHA reform

Last Friday, December 14th, the Senate passed a bill that would modernize FHA mortgages. This bill increases the maximum amount of an FHA loan from $362,790 to $417,000 in the lower 48 states. This greatly helps people in places with a high cost of housing where people applying for a loan might not qualify for a conventional loan because of their credit score. This bill also reduces the required down payment from 3% to 1.5%. The House passed a similar bill in September that eliminated the down payment requirement. The bill will now go to a conference committee in order to form a compromise bill. Then, a final bill will go to White House.

1 comment:

Jeremiah Arn said...

While Congress is working to keeping the mortgage market liquid with these FHA reforms, many lenders are concerned with new Federal Reserve requirements that make lenders disclose yield spread (back end or rebate) upfront. This new requirement will be confusing at best since most loans aren't locked when original mortgage disclosures are provided to the consumer.
Perhaps the government should stick to its Constitutional obligations, instead of providing for 'affordable housing.' Raveling the mess is another thing, though.