Senate OKs FHA Mortgage Bill

On Friday the Senate passed new legislation that would make more Federal Housing Administration Loans available to troubled borrowers facing foreclosure, lowering the down payment required and allowing larger loans. The House passed similar legislation in September, and now House and Senate members will have to “resolve a number of differences between the two pieces of legislation,” says the Wall Street Journal.

Bloomberg observes:

“The agency’s loan terms, which are more stringent than those of many lenders, may have caused some borrowers to turn to subprime mortgages. Housing officials estimate that the legislation will help about 200,000 homeowners who have fallen behind on their mortgage payments.”

The housing industry, including home builders and real estate agents, pushed for the legislation because they will benefit from the expansion of F.H.A. loans, says Bloomberg.

“This legislation is the perfect example of the kind of help Americans are looking for,” Senator Charles E. Schumer, a New York Democrat who was a sponsor of the bill, said on the Senate floor. “It is definitely and desperately needed.”

Senate Passes Bill Easing Home Loan Rules [New York Times]
Senate Passes Bill to Address Housing Crisis [Wall Street Journal]

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  1. rhombopteryx says:

    Sweet! Now the FHA can legally lend to those facing or in foreclosure – I bet those are GREAT credit risks! Won’t lose any taxpayer dollars on those loans…

  2. Tank says:

    “home builders and real estate agents, pushed for the legislation because they will benefit from the expansion of F.H.A. loans”

    lovely, the people making all the money can now make a little more, meanwhile lower downpayments mean the buyer will be upside down that much quicker.

    good plan

  3. darkened says:

    I’d rather the government give money to families trying to live and support themselves in or near the middle class than to give welfare to those who refuse to support themselves and would rather collect welfare, have kids to earn more welfare and earn money illegally so they can keep getting their welfare.

  4. ShortBus says:

    FHA loans are intended to help first-time homeowners get a footing, not bail out people who are living beyond their means. The required downpayment is only 3% and in Oakland county, Michigan (fourth most affluent county in the nation), the max loan rate is something like $220k, which is *plently* for a starter home.

    I’m sorry, but if you can’t afford to save up a 3% downpayment then you can’t afford homeownership. I’ve been saving for a home for a couple of years now, while also rebuilding credit mistakes I made as a young adult. It really bothers me how the US government has been acting like a drug dealer in our credit-addicted, over-consuming society. The fact that I’m going to have to pay more for my mortgage to compensate for the near-certain rise in defaults is enraging.

  5. rhombopteryx says:

    @darkened:

    I think the point of this post was expansion of the FHA loan process, and whether/how the legislation addrsses lending standards and mortgage system risk. Try that topic.

    Alternately, I think the “off-topic hating on welfare/pointless incitement of class warfare” blog is one page over.

  6. savdavid says:

    Excuse me. I worked hard for 20 years to afford a house. NO one helped me. No one is fixing my rates. I feel ripped off. The middle class supports this whole country, rich and poor. We are also the ones that are always shafted.