Today, US Rep. Ed Perlmutter joined an overwhelming majority of the House of Representatives in supporting HR 1852, “Expanding America’s Homeownership Act of 2007.” The House passed the bill 348-72.
In the wake of high foreclosures and instability in the mortgage markets, this bill revitalizes the Federal Housing Administration (FHA), providing critical aid to those in need of mortgage assistance. Hundreds of thousands of American families are concerned about losing their homes as their mortgage payments increase because of subprime loans with adjustable interest rates.
Perlmutter, the sole Colorado representative sitting on the House Financial Services Committee stated, “This bill is a critical step forward in helping so many Americans achieve the dream of home ownership by helping people get into stable, appropriate mortgages for their situations. Under this bill, up to 40 percent of families with subprime loans could qualify for more affordable fixed rate loans so that they can keep their homes.”
According to the Colorado Department of Housing, in Colorado foreclosure filings increased 31% from 2005 to 2006. Forecasts indicate that, barring major positive changes in economic conditions, foreclosure filings in Colorado could increase another 34% from 2006. Projections for the full year of 2007 further suggest that Adams and Arapahoe counties may experience increases of about 30%, with Denver county foreclosure activity looking to increase 35%.
HR 1852 includes the following provisions:
Lower Down Payments. Authorizes zero and lower down payment loans for borrowers that can afford mortgage payments, but lack the cash for a required down payment.
Higher Loan Limits. Increases loan limits to make FHA relevant in high cost markets where FHA is currently barred from making loans up to the local median home price.
Housing Counseling. Authorizes more than double the current funding level for housing counseling, to help subprime homebuyers and borrowers late on mortgage loan payments. Directs FHA to provide mortgage loans to higher risk (but qualified) borrowers, without authorizing unnecessary fee hikes on such borrowers.
Reverse Mortgages. Enhances the FHA reverse mortgage loan program to help seniors pay for health and other expenses, by removing the loan cap to avoid program shutdowns, raising loan limits, and by reducing the maximum fee lenders can charge for these loans.
Multifamily Loans. Raises FHA multifamily loan limits, so these loans can fully fund construction costs in high cost areas, and enhances sale of foreclosed FHA rental housing loans to localities, so that affordable housing can be maintained in local communities.
Affordable Housing Fund. Authorizes up to $300 million a year from the bill’s excess profits for affordable housing, instead of returning such funds to the General Treasury.
“These reforms will enable the FHA to serve more borrowers at affordable rates, offer refinancing to families struggling to meet their mortgage payments, and help create more affordable rental housing,” said Perlmutter. “These reforms will prevent more damage to the already weak housing market that is putting a drag on the economy.
