Wednesday, September 19, 2007

FHA Enlargement: Banks or Homeowners' Help Bill?

You be the judge.

The U.S. House of Representatives today passed "The Expanding American Homeownership Act,” which will increase homeownership opportunities for millions of Americans by modernizing the Federal Housing Administration (FHA) and returning it to its traditional role as an important financing option in today’s housing market.

...1) Eliminate the current statutory three percent minimum down payment, reducing a significant barrier to homeownership (this includes "0 down")

2) Create a new, risk-based insurance premium structure for FHA that would match the premium amount with the credit profile of the borrower.

3) Increase and simplify FHA’s loan limits. FHA’s loan limit in high-cost areas would rise from 87 to 100 percent of the GSE conforming loan limit and in lower-cost areas from 48 to 65 percent of the conforming loan limit.

...up to $762,000!!! for a "moderate-income" mortgage in some parts of the country.

This will give some Banks and bond-packagers (not to mention bond-holders) an escape from carrying nuclear waste mortgages.

In other words, it's now the taxpayers' problem.

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