Accord on Bill to Modernize the FHA Rounding into Shape

Article excerpt

WASHINGTON -- Lawmakers were scurrying Thursday to take action on measures to alleviate problems in the mortgage market before they adjourn next week, including attempting to pass bills to reform the Federal Housing Administration and grant tax relief to borrowers whose loans are reworked.

After months of delay on a bill to modernize the FHA to let more borrowers, including those with shaky credit, refinance into loans backed by the program, a tentative deal appeared to take shape Thursday.

Under the plan Sen. Tom Coburn - who has held up the bill for weeks over objections to a provision that would abolish a cap on FHA-insured reverse mortgages - would be granted floor time to debate the issue and offer an amendment that would keep the cap in place. Though the amendment is expected to fail, the Oklahoma Republican was apparently satisfied to bring attention to the issue.

It is not the only deal supporters of the legislation struck to win over Republicans opposed to the bill. Senate Banking Committee Chairman Chris Dodd and Sen. Richard Shelby, the panel's lead Republican, also agreed to add an amendment to the bill designed to ease objections by Sen. Elizabeth Dole, R-N.C. The provision would put a one-year moratorium on the Housing and Urban Development Department's plan to institute a risk-based premium structure on FHA loans.

Even if the FHA bill clears the Senate this week, however, lawmakers must still resolve differences between the House and Senate versions. Observers said with only a week left before Congress is set to adjourn for the year, it was unlikely there was enough time left to enact a final bill.

"Unless there was an agreement worked out within the next 24 or 72 hours in waiving the conference and removing some of the things that the Senate bill doesn't have ... you are still talking January or February before an FHA bill reaches the president's desk, if you're lucky," said James Ballentine, a lobbyist with the American Bankers Association.

But Steve O'Connor, a government affairs manager with the Mortgage Bankers Association, said there may be just enough time left.

"FHA is still very much in play," he said. "It's recognized in both chambers that it's a high priority to help stabilize the housing market, so I think there is a reasonably good chance they would be able to work something out."

The House bill would raise the cap on loans FHA could insure in high-cost areas to a maximum of $729,750; the Senate bill would only raise those limits to be commensurate with the government-sponsored enterprises' conforming loan limit of $417,000. …