Congress is set for a showdown over the country's ongoing housing market crisis when it returns after Labor Day. We strongly urge voters to consider contacting their elected representatives and voicing support for an overhaul of the Federal Housing Administration, which could help end the spiraling subprime mortgage fallout.
Officials are set to debate the merits of a proposed modernization of the FHA, an arm of the Department of Housing and Urban Development that has insured loans for millions of homeowners since the 1930s. Backers of an overhaul insist the legislation would allow the FHA to insure more mortgages by relaxing regulations and help the country's neediest homebuyers get loans or refinance unwieldy ones.
Government officials and real estate industry trade groups say existing law hampers the FHA, according to a recent story in Forbes magazine. For example, the size of mortgages the FHA insures is often too small in expensive areas of the country, meaning borrowers typically have to turn elsewhere for help.
As for the Forbes article notes:
"The FHA wants to raise the maximum mortgage amount it can insure in high areas to the same level as loans backed by the government-sponsored mortgage companies, Fannie Mae and Freddie Mac – $417,000 this year. Right now, the FHA's limit is $362,790 in those areas.
"A bill to do so passed a House committee in May and is expected to be taken up by the full House this fall. A similar bill overwhelmingly passed the House last year. Meanwhile, Democrats and Republicans on the Senate Banking Committee have been working out the details of their own bill, though a final deal has yet to be reached."
This legislation would also mean the FHA could handle thousands of new mortgage refinances a year. While it expects to refinance about 120,000 loans this year, the agency remains handcuffed by current rules and stipulations. A revamped FHA could open the door to more homeowners on the brink, giving them a solid chance of keeping their homes from default or foreclosure.
We at Mortgage Loan Place believe an FHA overhaul is overdue. Contact your U.S. representative today to voice your support of FHA modernization.