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Senate Passes FHA Modernization Bill

by Peter G. Miller
December 14th, 2007

The Senate today passed the FHA modernization bill, S.2338. The vote was 93-1.

The major points:

The maximum loan amount in the lower 48 states will be increased from to $362,790 to $417,000. This is the conventional loan limit. Previously the largest FHA loan for a single-family property was limited to 87 percent of the conventional loan limit.

The new and higher limit means the program will have greater utility in high-cost metro areas on both coasts. Also, borrowers with toxic loans above the current loan limit will also be able to refinance once the new measure becomes law.

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.

The measure will now go to a conference committee to see if a compromise bill can be hashed out. A final bill, if any, would then go to the White House.

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This entry was posted on Friday, December 14th, 2007 at 11:26 am 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.

7 Responses to “Senate Passes FHA Modernization Bill”

  1. pamela schriever Says:

    This will help many perspective homebuyers that otherwise would not have been able to purchase a home. FHA with Ameridream gift program has helped so many of our borrowers in the past. this will help many more in the future!!!! I look forward to reading all the details.

  2. Carmen Says:

    When can we hope to see FHA Modernization go into effect?

  3. Peter G. Miller Says:

    Carmen –

    Both the House and the Senate have passed versions of FHA Modernization. However, it is unclear when — if ever — the two bills will emerge from a conference committee.

    As well, the passage of FHA moderniation is not necessarily a good thing. As the GAO reports, MIP costs would rise for many borrowers and some of those qualified today under the program would not qualify if modernation is passed.

  4. Michelle Says:

    Has anyone heard anything else about this? We’re waiting to re-fi under this and man the wait is getting longer and longer… I check everyday and haven’t seen any word about when/if this is going to happen.
    Anyone? Anyone?

  5. Clay Speas Says:

    Has anyone heard if the Reverse mortgage limit will be raised along with the standard FHA mortage amount?

    Is it separate or included?

  6. Greengate Says:

    I just discussed this with a loan officer of a well known Reverse Mortgage Corporation. It is expected that $41700. will be available as the limit on Reverse Mortgages in “certain areas” of the country. We could assume the areas where the costs are above the national average.

    It is also expected that the differences between the Senate and House versions should be resolved around July of this year.

    There is one glitch concerning the FHA which uses the 10 year treasury index to determine rates. The rate of 5.55% was fixed for FHA about 10 years ago so if the rate falls below as it is now to 5.36 it means less money would be available since FHA still is required to use 5.55%. I am just passing on what I hear from a reliable source.

  7. Kurt Says:

    If they would pass this bill into law, it would sure help many seniors obtain Reverse Mortgages and help them from losing their homes to foreclosure!

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