Reform of the Federal Housing Administration took a big step forward in Congress in September as the House overwhelmingly passed an FHA modernization bill, while the Senate's own FHA legislation cleared committee.
On Sept. 18, the House, by a bipartisan 348-72 vote, approved the Expanding American Homeownership Act of 2007 (H.R. 1852), which would create 40-year FHA-insured mortgages, institute risk-based premiums, allow zero down payments for first-time borrowers and lift the cap on Home Equity Conversion Mortgages (HECMs).
"A revitalized FHA program will help future homeowners realize the dream of homeownership, and will prevent many first-time and inexperienced homebuyers from being pushed into loans that are unaffordable or difficult to understand," said House Financial Services Chairman and original bill cosponsor Barney Frank (D-Massachusetts). "The bill we passed today will help people all across America, because we have enacted provisions to allow the FHA to insure loans in high-cost areas."
Outgoing MBA Chairman John M. Robbins commended the House passage of FHA modernization, a long-standing MBA priority.
"The FHA is an important tool that can help some distressed borrowers who are having trouble paying their current mortgages avoid foreclosure," said Robbins. "The FHA needs to have the flexibility to continue to evolve to meet consumer demand in a changing mortgage market."
The next day, Sept. 19, on the heels of the House vote, …