FHA Modernization Act of 2007 passed in the US Senate today and is now headed to President Bush. It had passed the house on June 25th.
For those unfamiliar with this bill here is a brief summary from the HUD website :
1) Create a new, risk-based insurance premium structure for FHA that would match the premium amount with the credit profile of the borrower . It would replace the current structure, in which there is standard premium amount for all borrowers, while still protecting the soundness of its Insurance Fund.
2) Eliminate the current statutory three percent minimum down payment, reducing a significant barrier to homeownership . FHA’s existing down payment requirement does not meet the demands of today’s marketplace, where most first-time homebuyers put down two percent or less. The “new” FHA would offer a variety of down payment options.
3) Increase and simplify FHA’s loan limits. FHA’s loan limit in high-cost areas would rise from 87 to 100 percent of the GSE conforming loan limit and in lower-cost areas from 48 to 65 percent of the conforming loan limit.
Additional details is also available on the FHA website.
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on Dec 14th, 2007 at 4:38 pm
This looks like some good news overall. I do wonder a tad about the credit rating change, but maybe that’s just because it seems very open-ended.
on Dec 14th, 2007 at 9:12 pm
Hi,
This looks to be a good move towards encouraging homeownership across the US. Matching the insurance premium with that of the borrower’s credit profile seems to be interesting but we have to wait and watch how much borrowers are benefited from this. Until and Unless it’s been implemented,the exact picture doesn’t come out to be as clear as expected.
Increasings the loan limits is also a welcome move but we need to see that one who cannot afford doesn’t go away with the high loan amount, I mean nothing that can create a crisis as the nation has been going through since the past few months.
By the way, Shailesh, wish you merry Christmas!
Regards,
Jessica
on Dec 17th, 2007 at 7:57 am
Steve,
Conventional mortgages already have a credit score based insurance premium system. So, FHA is looking at a similar format. Which makes sense.
Jessica,
I agree this does appear to be a good move and I hope it helps lots of people. I’m not sure I like the lower down payment requirement deal, however, even in the current system, the borrower really doesn’t have to come with anything anyways. So, the non-profits will have less of a role.
Merry Christmas to you too.
on Jan 8th, 2008 at 4:33 pm
What amount will be the new ceiling on FHA SFR?…
thanks
on Jan 10th, 2008 at 9:57 am
[...] Refrain from being misinformed. Only MyCommunity loans are significantly affected. With the FHA modernization bill coming along nicely I expect any loss to be slightly mitigated through FHA. However, FHA is moving [...]
on Jan 10th, 2008 at 3:28 pm
Dr. Collins,
The limit is as follows:
Increase and simplify FHA’s loan limits. FHA’s loan limit in high-cost areas would rise from 87 to 100 percent of the GSE conforming loan limit and in lower-cost areas from 48 to 65 percent of the conforming loan limit.
The current conforming limit is $417,000.
Thanks for stopping by.
on Jan 25th, 2008 at 6:30 pm
We need this FHA reform as soon as possible. 1.5% down payment is reasonable and would fit a lot buyers.
As of today, the underwritting departments in major banks are not approving first time homebuyers programs for ridiculous reasons, so the nonprofits are full of work but with minimal effective results.
Realistically, there are lots of cties and counties called “declining markets” in which the banks would require an extra 5% down payment on top of the agreed one, so there is not that many people with at least 10%.
My question is : When is it going to become law? What are we waiting for?
on Jan 31st, 2008 at 3:42 pm
Please note that the Senate and House Bill are actually separate bills that now need to be worked out between both branches. Hopefully they will act on this soon and pass it along to the President. My company licenses mortgage brokers and bankers seeking to obtain FHA approval for their company and we have so many brokers that need the surety bond provision to come through. Hopefully we will see this revision included in the bill once it is approved by both branches.
Thanks,
Mike
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on Feb 9th, 2008 at 10:42 pm
Hi,
I have been hearing the news that the GSE conforming limit will be increased.
Does this mean that the FHA loan limit will increase to 100 percent of the new GSE conforming limit, as much as $729,750 in high cost-areas, when this is approved.
Does anyone have any idea when this conforming increase will be approved?
Thanks
on Feb 11th, 2008 at 12:56 pm
Hi Jason,
The bill is expected to be signed this coming Wednesday (Feb 13, 08). I wrote a post about this here:
http://www.azmortgageguru.com/stimulus-bill-passed-raises-conforming-loan-limit/
Thanks for stopping by.
on Mar 11th, 2008 at 3:19 pm
Shailesh expected bill to be signed in february. Is the FHA Modernization Act still in conference and when is it expected to be out?
on Mar 11th, 2008 at 6:27 pm
Hi Earl,
I don’t know when this will be address. I have signed up for an alert on this topic and as soon as I find out I will post something on this blog. So, check back son.
Sorry I don’t have anything to add at this point.
on Mar 12th, 2008 at 5:46 am
[...] of the most common questions I receive from this blog is regarding the status of the FHA Modernization Bill. Both chambers have passed differing versions of the same bill and the outstanding issues need to [...]
on Mar 27th, 2008 at 5:00 pm
i am a senior waiting for the senate to pass the reverse mortgage aspect of this bill. millions of seniors need to dip into their home equity to make ends meet. things are tight, getting tighter, and we have nowhere to turn except to it. it’s not the gov’t’s equity, it’s my equity. i’m not asking for a grant. i’m down to my last 90 days cash flow because the tyrannical gov’t has dictated that homes in my county are only worth $200,160. the contract is between me and the bank, i don’t know why the gov’t has to even be involved. this is the tyranny adams and franklin told us to be wary of… too much gov’t control.
can you imagine how many more freedoms we’ll lose after the elections in november?
on Apr 15th, 2008 at 11:53 am
The bill is not in the Presidents hands. Yes, the house version, HR 1852, and the Senate version, I think
is SB 3320, have to be reconciled through the conference committe report. This hasn’t been done yet.
Once that is done, then the conference report will be voted on by the entire House and Senate.
If that passes, THEN it will be on to the While House for the Prez to sign or veto.
bennettjohn, I understand your frustration. However, this isn’t tyranny by the government. It’s THEIR
program, so they make the rules. FHA is the insurer of the loan. That is why they are involved.
Go get a private reverse mortgage from someone other than
the US governement if you want rather than wait for them to increase lending limits.
Or, get one now with the lower limits as a stop gap until the bill is passed.
You could get hit by a bus before you use all that money, so a bird in hand…..