FHA Moderization Act

RISMEDIA, Dec. 18, 2007-The FHA Modernization Act of 2007, passed Friday by the U.S. Senate, would help protect the interest of America’s current and future homeowners by giving borrowers a safer alternative to riskier mortgage products while also helping many homeowners who may be facing foreclosure, according to the National Association of Realtors(R).

“A reformed FHA is positioned to help homeowners who face unaffordable mortgage payments as a result of resetting adjustable subprime loans and help bring stability to local markets and economies,” said NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif. “NAR commends the leadership of Majority Leader Harry Reid, D-Nev.; Senate Banking Chairman Christopher Dodd, D-Conn.; and Sens. Mel Martinez, R-Fla., and Richard Shelby, R-Ala., for passing the Federal Housing Administration reform bill, S. 2338.”

NAR has long supported FHA modernization legislation that would increase loan limits, reduce or eliminate the statutory 3% minimum cash down payment, and give FHA increased flexibility and the ability to streamline certain programs, in addition to strengthening the loss mitigation program.

“FHA can once again be a leader in providing safe loan products and preventing foreclosures by authorizing lenders to help borrowers who are in default. That assistance will make a substantial difference for many families that may otherwise face foreclosure,” Gaylord said.
In addition, the increase in FHA mortgage loan limits would help first-time home buyers, minority buyers, and people who do not qualify for conventional mortgages. Increased loan limits would also help people living in high-cost areas; current FHA limits make the program unusable in these areas,” said Gaylord.

Gaylord noted that FHA has made mortgage insurance widely available to individuals regardless of race, ethnicity or social status during periods of prosperity and economic depression. The FHA program makes it possible for higher risk yet creditworthy borrowers to obtain prime financing.

“NAR recognizes and appreciates the Senate’s bipartisan effort. We hope this bill is sent quickly to the President and that he signs it into law swiftly,” said Gaylord. “As the leading advocate for homeownership and housing issues, NAR believes that FHA reform not only helps home buyers, but also is a good catalyst for the nation’s economy.”

In addition to NAR, HUD Secretary Alphonso Jackson, the National Association of Home Builders (NAHB), and the Mortgage Bankers Association feel this is a step in the right direction for homeowners.

“I applaud the Senate’s overwhelming passage of an FHA Modernization bill that will provide hundreds of thousands of hard working American families a safer mortgage option — whether they’re looking to purchase a home or refinance an existing mortgage,” said Jackson. “HUD’s Federal Housing Administration can provide many homeowners with a fairer, more affordable, and more sustainable alternative to costly subprime loans. I especially appreciate the bipartisan leadership of Senators Chris Dodd and Mel Martinez in our effort to reform FHA.
I strongly urge the House and Senate to send the President a bill he can sign before the end of the year. Keeping a roof over the heads of families is the best gift Congress could give the American public this year.”

“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.”

“We applaud Banking Committee Chairman Dodd and Ranking Member Shelby, as well as other members of the Committee, for their efforts on this very important piece of legislation,” said David G. Kittle, CMB, Chairman-elect of the Mortgage Bankers Association (MBA). “Given the current housing market environment, modernizing FHA is something that the government can do that will have an immediate impact helping some distressed borrowers who are having trouble paying their current mortgages avoid foreclosure…This legislation will allow FHA to be more efficient and timely in meeting the needs of borrowers - which is especially important during this time of market turmoil. A revitalized FHA is crucial to helping low- and moderate-income and first-time home buyers realize the American dream of homeownership. We look forward to getting a meaningful FHA modernization bill to the President as soon as possible.”