About Government Refinance and Home Purchase Programs

Information and Updates on Government Mortgage Programs
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Michael Crittenden recently reported on the FHA reform bill that easily passed a vote in the senate. If it can get past the House and the President getting an FHA loan will become easier for quite a few people. See below:

WASHINGTON — The Senate passed legislation overhauling the Federal Housing Administration on Friday, a move lawmakers described as a “basic first step” to combat rising foreclosures and a broader housing crisis.

The legislation would increase the size of loans the FHA could insure, make counseling more available to homeowners and reduce down payments for borrowers getting an FHA loan. If enacted, it would be the first major piece of legislation passed this year addressing the problems in the mortgage markets.

The House passed its version of the legislation in September, and the White House has said it supports congressional efforts to modernize the FHA. House and Senate members will now have to resolve a number of differences between the two pieces of legislation. Of note is House language dedicating $300 million of FHA profits to an affordable housing trust fund that is a priority of House Financial Services Chairman Barney Frank (D., Mass.).

The Senate bill doesn’t include trust-fund language. At a news conference, Sen. Jack Reed, a Rhode Island Democrat, offered tepid support for adding it to the Senate bill.

“My sense is that if we can get a housing trust-fund mechanism through this vehicle it would be helpful,” Mr. Reed said. He said he would prefer creating a trust fund as part of legislation overhauling regulation of Fannie Mae and Freddie Mac.

Sen. Charles Schumer (D., N.Y.) played down the differences between the bills, saying it would be “pretty easy” to reach a compromise. Still, Mr. Schumer said the timing of such talks remains up in the air.

The Senate legislation would increase the size of loans the FHA is allowed to insure for first-time and low-income homeowners. The level would be set at the size of mortgages Fannie Mae and Freddie Mac are allowed to purchase, currently tabbed at $417,000 and referred to as the “conforming loan limit.”

Additionally, the Senate bill would require homeowners to make a cash investment of at least 1.5% in the value of a home. That is half what the FHA currently requires.

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