Rep. Frank: FHA Loans & The Stimulus Package
January 28th, 2008
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U.S. News & World Report has a good interview with Rep. Barney Frank (D-MA), chairman of the House Financial Services Committee, regarding the proposed financial stimulus package. Frank discusses a number of issues, including the FHA mortgage program.
It should be said that Frank represents the high-cost Boston area — an area with very high home prices which would benefit enormously from an increase in FHA loan limits.
Below is what Frank had to say:
“We should put a housing stabilization package into the stimulus package. The House and the Senate have both passed bills that would get the Federal Housing Administration more actively into the subprime lending business as an alternative to the abusive loans. It’s foreclosure avoidance—it doesn’t cost money. We’ve already got a lot of House-Senate-administration agreement on that.
“It also aims to get the market unstuck at the upper end. Right now it’s hard for people to sell houses that cost more than $417,000, which is a lot of houses in California and some other places in America. So we would take the cap off what the FHA, Freddie, and Fannie could do in terms of upper income.
“The administration has said to the lenders, don’t raise the interest rates and don’t reset the interest rate on these adjustable rates for five years. Well, now what you need to do is allow people to get out from under during those five years. So we can get them to go to the FHA and get a conventional mortgage that has mortgage insurance and they can get a lower interest rate. It’s an increase in the cap in the upper limit.”
For the full article, see: Q&A: U.S. Rep. Barney Frank
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