September 18, 2007House Passes Bill to Reform the FHA Mortgage Insurance Program and Increase the FHA Loan Limit

The U.S. House of Representatives passed H.R.1852, the Expanding American Homeownership Act of 2007, today by a vote of 348 to 72.  The bill will reform the FHA mortgage insurance program in an effort to allow it to compete in today's housing market.  Included in the bill is an amendment to increase the FHA loan limit to 125% of an area's median home price capped at $729,750.  H.R. 1852 was introduced by California Congresswoman Maxine Waters and the amendment to increase the loan limit was sponsored by Congressmen Gary Miller and Dennis Cardoza of California, along with Barney Frank of Massachusetts.

Other changes to the FHA program included in the bill are:

• Extending the mortgage term length from 35 to 40 years,
• Allowing FHA to insure zero-down mortgages in certain circumstances,
• Allowing FHA to use risk-based pricing when setting their mortgage insurance premiums,
• Increasing mortgage counseling for homebuyers to help them utilize the program, better educate them and help avoid foreclosure, and
• Increasing the number of reverse mortgages lenders may do.

C.A.R. and NAR have worked to pass FHA reform for a number of years and will now focus on getting this vital piece of legislation through the Senate.

To view the House of Representatives' final vote results please visit: http://clerk.house.gov/evs/2007/roll876.xml