FHA Bill Passes Senate

The Senate has approved Federal legislation to provide much needed assistance to homeowners feeling the strain from soaring interest rates on subprime mortgages.

The bill that was approved gives the Federal Housing Administration (FHA) the authority to back refinanced loans for borrowers who have fallen behind on mortgage payments. Tens of thousands of borrowers could take advantage of refinance if the bill becomes law.

The reason these borrowers are in danger is that their adjustable-rate mortgages are “resetting,” which means the introductory interest rates are about to jump sharply to higher levels that they may not be able to afford.

With this Senate bill, the maximum insurable mortgage for the FHA will be raised from $362,790 to $417,000 in high-cost areas, on par with loans that Fannie Mae and Freddie Mac insure.

The measure is the first action taken to address the subprime mortgage crisis and give homeowners greater resources to avoid foreclosure.

“It is good before the Christmas season we have made a down payment on the solution to this problem…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.” — Sen. Mel Martinez (R-FL)