Nov 30 2007
FHA Legislation Update
The last time I reported on coming changes I was expecting some movement in early December, that seems unlikely at this time due to “holds” put on the FHA legislation by several Senators. Their actions prevented the legislation from being on a “fast track” but it appears that at least the “holds”will be lifted this week or next.
Identical provisions in the House bill and the Senate bill are raising the mortgage limit floor from 48% to 65% of GSE limit ($271,000), making condo approval processing easier, increasing the maximum loan limits for reverse mortgages to $417,000 and allowing reverse mortgages to be used for home purchases. Since it is in both bills they should approve these changes.
Different provisions in the House and Senate bills are as follows:
Down payment - Senate wants current 3% to be reduced to 1.5%, House wants 0% down payment or 100% financing. Senate probably wins this one so we expect 1.5% down payment.
Mortgage limits in high cost areas, Senate wants to raise from $308,370 to $417,000. House wants to go to $729,000 (yeah baby!) Senate will probably win this too but may have to go to about $500,000.
Seller funded down payment assistance - Senate hates it, House loves it. Too close to call.
Thanks for the update, Jeff! The FHA reforms cannot happen soon enough. I hope the media jumps on this and puts the positive spin on it that it deserves. These reforms will give a real boost to the housing market, and the professionals who are aware of the changes and programs will be able to lead the way out of the “slump”!