The Senate has just passed legislation that would open the door for FHA to become more competitive in the marketplace! The FHA Modernization bill, which now heads back to the House for “reconciliation” before heading to the White House, had been
stalled in the Senate for weeks.
Details still to be worked out include the increasing of loan limits, term (up to 40 years), risk-based MIP pricing, lowering the down payment requirements and a few other details, but is expected to happen quickly. This is good news for the industry, consumers and FHA, as we battle with increasing pressure from the sub-prime fallout.
According to news reports, an agreement was reached in the Senate on Thursday which will have the FHA reform bill heading to a vote later today or on Monday!
According to several reports I have read, Senator Tom Coburn from OK, whom I came down hard on in a previous post, has let it be known that his objections to the FHA reform bill are small and primarily have to do with reverse mortgages. In an exchange with Senator Charles Schumer of NY on the Senate floor Wednesday morning, Senator Coburn hinted that he may be willing to limit debate on the bill and amendments and it may be possible for the bill to come up for a vote as early as next week!
I really do hate to be a one trick pony lately with every post about the same thing, and I promise next week I’m going to jump back into the every day mechanics of getting FHA loans closed, but one of the most pressing issues facing our country today is the tightening of credit in the mortgage market. People who could be helped to keep their homes, or to buy new homes and help stop the downward spiral of housing values are being locked out of getting a loan while the politicians hold press conferences telling us what they are supposedly doing about the problem.
This afternoon the U.S. District Court for the District of Columbia has issued an injunction on behalf of Partners in Charity Inc., Futures Home Assistance Program, Sovereign Grant Alliance, Genesis Foundation, Home Down Payment Gift Foundation, Freedom Home Baptist Church, Inc. and the Dove Foundation, Inc. against the HUD rule to eliminate seller funded down payment assistance programs. This injunction opens the door for sellers to continue use of down payment assistance programs until a final resolution on the rule is determined.
Every day for the last month, I’ve had people asking me when changes are going to be made to the FHA loan program. I’ve been trying urgently to get some more information. According to this column by nationally syndicated real estate columnist Kenneth Harney in Realty Times, we aren’t the only ones confused. Read the rest of this entry
For many years, down payment assistance has been provided by non-profit groups such as the Nehemiah Foundation, Ameridream and others. Under these down payment assistance programs, the non-profit agency would give a gift to the buyer of 3% or more of the sales price of the home. In return, the seller of the home would make a donation to the non-profit foundation in the amount of the gift plus an administration fee. HUD has looking hard at these programs for quite a while and action has been fermenting since earlier in 2007 when the IRS began auditing and subsequently denying non-profit organization status to many of these groups. In July, HUD themselves released a potential rule forbidding the use of such down payment assistance on FHA loans for public comment. The adoption was delayed once while allowing for further comment.
