FHA Programs (Federal Housing Administration) - Issue Summary
| What is the fundamental Issue: |
| Despite the successes of the FHA program, too many potential homeowners in underserved populations continue to be left out from the American dream of owning a home. FHA’s market share has dwindled because its loan limits, inflexible downpayment requirement, and fee structure have not kept pace with the current mortgage marketplace. If FHA had been a viable mortgage alternative, many homebuyers would not have explored non-traditional mortgages, many of which are very risky. |
|
| I'm a Realtor®. What does this mean to my business? |
| The FHA single-family mortgage program has played an important and vital role in the mortgage marketplace. The FHA program has a public purpose obligation to provide mortgage insurance to American families who choose FHA to meet their homeownership needs. Reforming FHA will make it a more viable product for homebuyers and expand the pool of available safe and affordable loan products. |
|
| NAR Policy: |
| NAR is a strong supporter of the single- and multi-family programs administered by the Federal Housing Administration (FHA). However, FHA’s market share has diminished considerably threatening its ability to serve its public purposes. NAR is working with the Department of Housing and Urban Development (HUD) to modernize FHA to enhance its effectiveness in today’s mortgage marketplace. |
|
| Legislative/Regulatory Status/Outlook: |
|
Representatives Maxine Waters (D-CA) and Barney Frank (D-MA) introduced a bill (H.R. 1852), that would 1) increase the FHA loan limits nationwide and in high cost areas; 2) eliminate the 3% downpayment requirement on FHA loans for first time homebuyers; 3) extend the loan term to 40 years; 4) allow FHA to risk-based price their products; 5) eliminate the cap on the number of reverse mortgages that FHA can insure; and 6) streamline usage of the FHA condominium loan program. It would also allow excess FHA funds to be put into an affordable housing fund, rather than go to the US Treasury. This bill passed the House Financial Services Committee by a vote of 45-19 on May 3, 2007. It is expected on the House floor in September.
In April, REALTOR® Iona Harrison of Upper Marlboro, MD represented NAR at a hearing before the House Financial Services Housing Subcommittee on H.R. 1852. Ms. Harrison testified on the urgent need for FHA reform to provide a safe, affordable financing alternative for homebuyers.
There is not yet a companion bill in the Senate, but the Senate Appropriations Subcommittee on Housing held a hearing on solvency and reform proposal for FHA in March. JoAnne Poole, a REALTOR® from Glen Burnie, MD testified on behalf of NAR. Her testimony focused on the point that had FHA been reformed, many subprime borrowers would have had an alternative to the non-traditional loans they now hold. Senators Dodd (D-CT) and Martinez (R-FL) are expected to introduce a bill in September, with action in the Senate Banking Committee shortly thereafter. |
|
Link to Thomas |
| |
|
|
