What's At Stake?

NAR Call for Action: Market Conditions Demand FHA Reform Now

NAR supports legislation to modernize the Federal Housing Authority (FHA) single-family mortgage insurance program and make FHA loans an available financing option once again. Had FHA loans been a viable product in the recent past, many families would not have fallen prey to the risky sub-prime mortgages causing record numbers of defaults and foreclosures.

About Federal Housing Authority (FHA) Reform

The recently enacted economic stimulus package raised FHA loan limits in EVERY district in the country to levels more accurately reflecting home prices. Twenty-three (23) states today have communities with limits over $417,000.
Since its inception in 1934, FHA has never needed a federal bailout, and has been completely self-supporting. In fact, FHA has contributed a significant amount of money to the Federal Treasury each year. An increase in the FHA loan limits only increases the amount of income generated by FHA – income that is used to fund other government programs.
The most recent independent audit confirms that the FHA fund's current economic value is over $22 billion. In simple terms, this indicates that if the FHA single-family loan program stopped operations today, the current portfolio would be expected to generate $22 billion dollars over the remaining life of the loans in the portfolio above what it would pay out in claims.
FHA is a leader in preventing foreclosures – an important consideration in today's housing market. FHA's loss mitigation program authorizes lenders to assist borrowers in default. In 2004 alone, more than 78,000 borrowers were able to retain their home through FHA's loss mitigation program; two years later, nearly 90 percent of these borrowers are still in their homes.
FHASecure is a new program which allows FHA to refinance loans for people who have not made all of their payments on their current loan on time due to an interest or payment schedule reset, but who otherwise have good credit. However, the current 3% equity requirement limits the usefulness of this program. If downpayment requirements were changed, the FHASecure program could help many more struggling families.

Status in Congress

September 28, 2007 - H.R. 1852, the FHA Reform bill, passed the House by a vote of 348-72.

December 14, 2007 - S. 2338, the FHA Reform bill, passed the Senate by a vote of 93-1.

On Wednesday, January 29, 2008, the House of Representatives passed a bipartisan economic stimulus bill (H.R. 5140) that includes temporary increases in the GSE and FHA mortgage loan limits.

The House economic stimulus bill increased the Fannie Mae and Freddie Mac loan limit for loans originated from July 1, 2007 to December 31, 2008, to the lesser of 125% of the area median home price or $729,750.

The House bill also increased FHA loan limits up to the greater of $271,050 or 125% of area median home prices, capped at $729,750 in high cost areas.

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	What's At Stake? NAR Call for Action: Market Conditions Demand FHA Reform Now NAR supports legislation to modernize the Federal Housing Authority (FHA) single-family mortgage insurance program and make FHA loans an available financing option once again. Had FHA loans been a viable product in the recent past, many families would not have fallen prey to the risky sub-prime mortgages causing record numbers of defaults and foreclosures. About Federal Housing Authority (FHA) Reform The recently enacted economic stimulus package raised FHA loan limits in EVERY district in the country to levels more accurately reflecting home prices. Twenty-three (23) states today have communities with limits over $417,000. Since its inception in 1934, FHA has never needed a federal bailout, and has been completely self-supporting. In fact, FHA has contributed a significant amount of money to the Federal Treasury each year. An increase in the FHA loan limits only increases the amount of income generated by FHA – income that is used to fund other government programs. The most recent independent audit confirms that the FHA fund's current economic value is over $22 billion. In simple terms, this indicates that if the FHA single-family loan program stopped operations today, the current portfolio would be expected to generate $22 billion dollars over the remaining life of the loans in the portfolio above what it would pay out in claims. FHA is a leader in preventing foreclosures – an important consideration in today's housing market. FHA's loss mitigation program authorizes lenders to assist borrowers in default. In 2004 alone, more than 78,000 borrowers were able to retain their home through FHA's loss mitigation program; two years later, nearly 90 percent of these borrowers are still in their homes. FHASecure is a new program which allows FHA to refinance loans for people who have not made all of their payments on their current loan on time due to an interest or payment schedule reset, but who otherwise have good credit. However, the current 3% equity requirement limits the usefulness of this program. If downpayment requirements were changed, the FHASecure program could help many more struggling families. Status in Congress September 28, 2007 - H.R. 1852, the FHA Reform bill, passed the House by a vote of 348-72. December 14, 2007 - S. 2338, the FHA Reform bill, passed the Senate by a vote of 93-1. On Wednesday, January 29, 2008, the House of Representatives passed a bipartisan economic stimulus bill (H.R. 5140) that includes temporary increases in the GSE and FHA mortgage loan limits. The House economic stimulus bill increased the Fannie Mae and Freddie Mac loan limit for loans originated from July 1, 2007 to December 31, 2008, to the lesser of 125% of the area median home price or $729,750. The House bill also increased FHA loan limits up to the greater of $271,050 or 125% of area median home prices, capped at $729,750 in high cost areas. Go Back
	National Association of Realtors (comments@realtoractioncenter.com)