Senate Approves FHA Limit Adjustments

By a vote of 93-1, the U.S. Senate has approved the FHA Modernization Act of 2007 (S.2338). The bill increases the sizes of loans that the Federal Housing Administration (FHA) can insure, makes counseling more available to homeowners and lowers down payments for borrowers getting an FHA loan.

Specifically, S.2338 amends the National Housing Act to ‘revise requirements for the maximum principal loan obligation eligible for mortgage insurance, as well as the cash investment requirement; and prohibit seller-funded down-payment assistance,’ the bill's text states. It also ‘increases the maximum up-front mortgage insurance premium the Secretary of Housing and Urban Development (HUD) may collect on mortgages secured by a one- to four-family dwelling,’ among many other related measures.

According to a statement from the National Association of Realtors, this legislation will ‘help protect the interest of America's current and future homeowners by giving borrowers a safer alternative to riskier mortgage products while also helping many homeowners who may be facing foreclosure.’

‘The president believes FHA should be able to design mortgage products that can help at-risk borrowers, reward borrowers with good credit histories, and protect taxpayers with actuarially sound financing,’ adds a statement from President Bush's office. ‘We hope to work with Congress to resolve those concerns in a conference between the House and Senate.’


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