FHA Revamping Itself
The current housing market problem is beginning to swell to the point that government sponsered housing programs are starting to take some action. It is expected that US Senators will vote on a bill to modernize the federal agency (FHA) in the very near future. It is hoped that this new bill will help the already beleaguered US housing market.
Recently, lawmakers reached an agreement that let Republicans make some changes to the Federal Housing Administration modernization bill. An up or down vote on the bill is expected soon.
Because of the way the vote is set up, any senator can block the passage of the bill, but supporters hope that by allowing votes on amendments by Sen. Elizabeth Dole, R-N.C., and Sen. Tom Coburn, R-Okla., would ensure its passage.
As of yet, the US Senate has not passed any legislation addressing the housing crisis.
Real estate experts as well as some government officials say the current size of mortgages the FHA can back is not large enough to attract borrowers in expensive housing markets.
FHA home loans are not direct loans to the consumers. FHA loans are insured by the government in the event of default, but the mortgages themselves are made by home loan lenders such as Bank of America Corp. and Wells Fargo & Co., and are typically offered to investors as mortgage-backed securities by the federal housing finance agency Ginnie Mae.
Brian Montgomery, the Housing Department’s assistant secretary in charge of the FHA, said the housing market’s current problems warrant the overhaul. “The entire mortgage market needs the stability that FHA brings,” he said recently.
The new Senate bill would increase the maximum mortgage the FHA can insure in high-cost areas from $362,790 to $417,000. This is the same level as loans that are currently backed by Fannie Mae and Freddie Mac.
The US House overwhelmingly passed a similar bill this fall.