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Kenneth Harvey over at the Washington Post recently wrote about the FHA reform bill that is stalling in the US senate. Here is an excerpt:

Thousands of Americans may be losing their homes to foreclosure or facing hefty mortgage-payment resets, but the Senate appears to be in no rush to help.

The House has passed several major housing-relief measures in recent weeks, but the Senate hasn’t passed even one. On the eve of its two-week Thanksgiving recess, the House approved by a bipartisan vote the most sweeping reforms of the national mortgage system in more than two decades. Meanwhile, the Senate stalled legislation that would strengthen the Federal Housing Administration’s mortgage programs, a key resource for homeowners who need to refinance out of adjustable-rate loans into more affordable fixed-rate ones.

The FHA reform bill passed the House in September and had been approved by the Senate Banking Committee by a 20-1 vote. But it was blocked from floor action by a small group of Republicans who are unsympathetic to federal involvement in the mortgage market, even if it’s designed to assist subprime borrowers.

The FHA bill is particularly important for high-cost housing markets — California and parts of the East Coast in particular — because it raises the maximum mortgage amounts the agency can insure. It also would cut minimum down payments and allow the FHA to charge lower premiums to applicants with better credit histories and higher premiums to borrowers with less-favorable credit.

The bill was blocked from a floor vote on Nov. 15 by Sens. Tom Coburn (R-Okla.) and Jim DeMint (R-S.C.) after a hold by Elizabeth Dole (R-N.C.). Dole objects to the FHA’s plan to begin pricing mortgages based on credit risk starting in January, whether the reform bill is approved or not. Dole is an ally of the private mortgage insurance industry, which would have to compete with a revived FHA in the low-down-payment segment of the mortgage market.

Read the whole article here.

Comments (0) Posted by G.R.A. Admin on Saturday, November 24th, 2007


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