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More Details FHA Changes

Posted on September 20, 2007 by Ray Williams (NMLS #216267).

Here is a more detailed release…

HUD No. 07-141

HUD SECRETARY URGES SWIFT PASSAGE OF FHA REFORM IN SENATE

WASHINGTON – U.S. Housing and Urban Development Secretary Alphonso Jackson today said legislation overwhelmingly approved by a Senate panel this morning to modernize HUD’s Federal Housing Administration (FHA) will go a long way toward achieving the Administration’s goal of better serving low- and moderate-income, minority and first-time homebuyers.

Yesterday, the U.S. House of Representatives widely approved H.R. 1852, The Expanding American Homeownership Act of 2007, which Jackson said would “serve as a starting point to bring good news to families who need a safe, fair and affordable FHA alternative to the exotic subprime market.”

In a follow-up letter to the Chairman and Ranking Member of the Senate Banking Committee today, Jackson said the FHA modernization legislation that was marked up by this Committee today includes several “beneficial provisions” including reasonably adjusting FHA’s loan limits, eliminating the cap on the number of reverse mortgages FHA can insure, and simplifying the downpayment requirement.

“The primary mission of FHA is to reach borrowers who either are not being served or are being underserved, and to help them achieve the American Dream of homeownership. Like the Administration’s proposal, the bipartisan Dodd-Martinez bill would more effectively reach these borrowers by reasonably adjusting the loan limits for the single family mortgage insurance program to account for high-cost housing markets and increased construction costs,” Jackson said in his letter to Senators Dodd and Richard Shelby.

Below is the full text of Secretary Jackson’s letter to Senators Dodd and Shelby:

September 19, 2007

The Honorable Christopher Dodd
Chairman
Committee on Banking, Housing, & Urban Affairs
United States Senate
Washington, D.C. 20510

The Honorable Richard Shelby
Ranking Member
Committee on Banking, Housing, & Urban Affairs
United States Senate
Washington, D.C. 20510

Dear Chairman Dodd and Senator Shelby:

I am pleased to offer my enthusiastic support for legislation to modernize the Federal Housing Administration (FHA). One of our key objectives at the Department of Housing and Urban Development is to update the FHA mortgage insurance program to better serve low- and moderate-income and first-time homebuyers. The comprehensive legislation that Chairman Christopher Dodd and Senator Mel Martinez have drafted would bring us a long way toward achieving that goal. I urge the Committee on Banking, Housing, and Urban Affairs to approve FHA Modernization so that the full Senate can vote on it.

The primary mission of FHA is to reach borrowers who either are not being served or are being underserved, and to help them achieve the American Dream of homeownership. Like the Administration’s proposal, the bipartisan Dodd-Martinez bill would more effectively reach these borrowers by reasonably adjusting the loan limits for the single family mortgage insurance program to account for high-cost housing markets and increased construction costs. The bill also provides FHA with more flexibility on upfront premiums. Such flexibility, combined with solid reporting requirements, is necessary to allow FHA to design mortgage products that reward borrowers with good credit histories and protect taxpayers with actuarially sound pricing. It is for these reasons that the Administration proposed new flexibility for both upfront and annual premiums and we urge the Committee to adopt this proposal.

The bill includes several other beneficial provisions: eliminating the arbitrary cap on the number of reverse mortgages FHA can insure, which could help hundreds of thousands more seniors stay in their homes; simplifying FHA’s down payment requirements; and expanding sources of private lending for manufactured home purchases.

On August 31, 2007, President Bush renewed his call for Congress to enact FHA Modernization. If Congress approves legislation to modernize FHA, as the President and I have called for, I estimate that we could help another 200,000 families avoid problems with their mortgages and instead help them get into a safe, fair, and affordable FHA-backed loan.

While we may raise additional concerns as the FHA bill moves through the legislative process, I am grateful for the priority that the Senate Baking Committee has placed on modernizing FHA. I therefore urge swift passage of the Dodd-Martinez bill so that more families can realize and maintain the American Dream of homeownership.

The Office of Management and Budget advises that from the standpoint of the Administration’s program that there is no objection to the transmittal of this letter.

Sincerely,

Alphonso Jackson

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