To help alleviate the current housing downswing and allow the Federal Housing Administration to insure mortgages for more home owners, the Senate today approved legislation that would improve the capacity and flexibility of the FHA to serve the credit needs of subprime and other challenged mortgage borrowers. The bill passed by an overwhelming 93-to-1 margin.
"The nation's home builders applaud the Senate action to modernize the FHA to allow the agency to carry out its mission to spur housing opportunities for America's working families," said Brian Catalde, president of the National Association of Home Builders (NAHB) and a home builder from El Segundo, Calif. "The measure would offer borrowers a safe and fair mortgage alternative to the volatile subprime market. We urge the House and Senate to move quickly to iron out differences between their bills and bring this legislation to the President's desk before year-end."
Faced with a severe deterioration in the availability and affordability of housing credit during a period when FHA's programs have failed to keep pace with procedural and technological advances in conventional mortgage loan programs, S. 2338, the FHA Modernization Act of 2007, would enable the FHA to respond to the needs of borrowers and play an important role in stabilizing the mortgage markets.
Specifically, S. 2338 would:
Increase the current limit for FHA-insured mortgages to enable deserving potential buyers to purchase homes in more markets across the country.
Grant the FHA authority to establish greater flexibility in setting downpayment requirements for its single-family programs.
Simplify requirements for condominium loans, which are often burdensome and differ significantly from the rules applied to mortgage loans for detached single-family homes.
Allow the FHA to insure more "reverse mortgages" and increase the maximum loan amount for such transactions.
Can the Senate really change the FHA culture to accommodate the concept that people want to live in houses they cannot afford?