Tim Westrich over at the Center For American Progress wondered today if the new FHA reforms will be enough. Here is an excerpt:
The Senate will soon take up legislation that would give low- and moderate-income homeowners who are struggling with their mortgage payments some much needed relief with the potential of being signed into law before the year’s end. Many families are dealing with adjustable-rate mortgages, and will likely face higher monthly payments when their rates reset over the next two years. These resets have the potential to drive even more homeowners into default and eventually into foreclosure in a very short period of time.
The Federal Housing Administration Modernization Act of 2007 would give the FHA more flexibility to insure mortgages for higher-risk borrowers and step up its role in solving the mortgage meltdown. And a valuable amendment added by Sen. Jack Reed (D-RI) will provide struggling borrowers with financial counseling to help them refinance if it’s included in the final draft of the bill.
Help for homeowners couldn’t come sooner. But while the bill and especially the Reed amendment are useful first steps, we can and should do much more to reduce the fallout from the subprime mortgage crisis and help preserve neighborhoods, communities, and the limited wealth of low- and moderate-income families.