FHA Update: US House Passes Major Overhaul

All the powers to be, from President Bush down to private citizen and former Fed chief believe increased homeownership is a good thing. The subprime mortgage market played a very important role in making the American dream more accessible. With the subprime mortgage market virtually wiped out, the government is setting up FHA to fill the vacuum.

With this in mind the US House passed the FHA Modernization Bill yesterday. Here is what Inman News is reporting this morning:

The House of Representatives passed legislation Tuesday that would expand the pool of borrowers who can take advantage of FHA loan guarantee programs, which have become the centerpiece of the Bush administration’s efforts to help homeowners avoid foreclosure.

HR 1852, The Expanding American Homeownership Act of 2007, would lower down-payment requirements and raise the limits on the size of loans insured by the Federal Housing Administration (FHA). The bill would also allow FHA to serve borrowers who would not previously have qualified because of their credit scores by charging them higher, “risk-based” premiums.

While the President opposes raising the FHA limit beyond $417,000 (the current conforming loan limit), the White House is not opposed to a compromise. We’ll see how an increased government role in housing plays out.

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