| FHA Loan Programs |
FHA Bill Passes Senate
Hundreds of thousands of Americans facing foreclosure
because of the ballooning interest rates on their
subprime mortgages would get help from the federal
government under legislation overwhelmingly approved
by senators Friday.
The legislation, approved 93-1, is the Senate's first
attempt to address the looming subprime mortgage
crisis through stand-alone legislation. Sen. Jon Kyl,
R-Ariz., was the lone senator to vote no.
because of the ballooning interest rates on their
subprime mortgages would get help from the federal
government under legislation overwhelmingly approved
by senators Friday.
The legislation, approved 93-1, is the Senate's first
attempt to address the looming subprime mortgage
crisis through stand-alone legislation. Sen. Jon Kyl,
R-Ariz., was the lone senator to vote no.
The bill would allow the Federal Housing Administration to
back refinanced loans for tens of thousands of borrowers
who are delinquent on payments because their mortgages
are resetting to sharply higher rates from low initial "teaser"
levels.
The Senate bill raises the maximum mortgage the FHA can
insure in high-cost areas from $362,790 to $417,000 _ the
same level as loans backed by Fannie Mae and Freddie Mac.
An estimated 2 million to 2.5 million adjustable-rate
mortgages are scheduled to "reset" this year and next,
jumping from low "teaser" rates for the first two or three
years to much steeper rates that could cost borrowers
their homes.
The wave of resets could crest during the presidential and
congressional election campaigns next year, and the issue
has brought politically charged debate in recent weeks over
possible responses by the government.
"It is good before the Christmas season we have made a
down payment on the solution to this problem," said Sen.
Mel Martinez, R-Fla. "The government will not be able to fix
all of the problems out there in the credit community.
However, this is a first step, a good first step, and a good
bipartisan step."
The legislation will help the Federal Housing Administration
"be a source of salvation for those families who were
tricked into unaffordable loans," said Sen. Charles
Schumer, D-N.Y.
President Bush last week announced an agreement with
mortgage companies to freeze interest rates for certain
subprime mortgages for five years. Democrats in Congress,
however, criticized the White House plans as being too
limited.
The FHA has been pushing Congress for years for the
ability to guarantee more loans. The agency, which has
provided mortgage insurance since 1934, currently insures
3.7 million mortgages.
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back refinanced loans for tens of thousands of borrowers
who are delinquent on payments because their mortgages
are resetting to sharply higher rates from low initial "teaser"
levels.
The Senate bill raises the maximum mortgage the FHA can
insure in high-cost areas from $362,790 to $417,000 _ the
same level as loans backed by Fannie Mae and Freddie Mac.
An estimated 2 million to 2.5 million adjustable-rate
mortgages are scheduled to "reset" this year and next,
jumping from low "teaser" rates for the first two or three
years to much steeper rates that could cost borrowers
their homes.
The wave of resets could crest during the presidential and
congressional election campaigns next year, and the issue
has brought politically charged debate in recent weeks over
possible responses by the government.
"It is good before the Christmas season we have made a
down payment on the solution to this problem," said Sen.
Mel Martinez, R-Fla. "The government will not be able to fix
all of the problems out there in the credit community.
However, this is a first step, a good first step, and a good
bipartisan step."
The legislation will help the Federal Housing Administration
"be a source of salvation for those families who were
tricked into unaffordable loans," said Sen. Charles
Schumer, D-N.Y.
President Bush last week announced an agreement with
mortgage companies to freeze interest rates for certain
subprime mortgages for five years. Democrats in Congress,
however, criticized the White House plans as being too
limited.
The FHA has been pushing Congress for years for the
ability to guarantee more loans. The agency, which has
provided mortgage insurance since 1934, currently insures
3.7 million mortgages.
Article From CNBC.Com
