What The House FHA Mortgage Bill Actually Does

by Peter G. Miller
September 19th, 2007

According to Rep. Barney Frank (D-MA), chairman of the House Financial Services Committee, the FHA bill passed by the House offers the following changes and benefits when compared with the current program.

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.”

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This entry was posted on Wednesday, September 19th, 2007 at 2:31 pm and is filed under , . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

3 Responses to “What The House FHA Mortgage Bill Actually Does”

  1. FHA Book - Expert Source on FHA Loans » Blog Archive » Learn More About HR 1852 Says:

    [...] Wondering exactly what the passage of HR 1852 means for the FHA and borrowers? Head over to Peter Miller’s FHA Mortgage Guide to learn the specifics. Peter has laid out all of the changes and what they mean in an easy to read format. Check it out! 20 Sep 07 | FHA Loans, Check It Out [...]

  2. Cesar Malta Says:

    What does this bill do for mortgage lenders?

    NO yearly audit? Serity bond only? HOw much of a bond?

  3. FHA Mortgages — Senate Passes FHA Modernization Bill | FHA Mortgage Guide Says:

    [...] The legislation, introduced by Se. Christopher Dodd (D-CT), requires a 1.5 percent down payment, a reduction from the current 3 percent requirement. The House version passed in September would allow FHA loans with nothing down. [...]

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