NAHB to Congress – You’re Taking Too Long
For the past few months Congress has been hearing testimony and considering changes to the standing FHA legislation. There are those who think Congress isn’t working fast enough. Yesterday the National Association of Home Builders called Congress out for not yet implementing any of the proposed reforms, saying that the FHA has been unable to fully respond to the needs of potential borrowers due to regulatory restraints as well as loan limits. Revitalizing the current FHA legislation is in high demand right now as the current subprime market has nosedived due to predatory loans becoming to burdensome for the borrowers, resulting in mass foreclosures. Altering the legislation could be an incredibly effective way to save millions of homeowners from having to default on their loans. FHA loans are typically used by borrowers with moderate to low incomes or those with less than perfect credit. However, FHA loans have dropped 18 percent of their market share from 1990 to 2006. This was due in large part to the perception of the FHA as being a highly bureaucratic agency, especially when other subprime loan programs are offering better terms. Recently the FHA has bounced back and if the proposed changes to the legislation pass, FHA loans will be a considerably more affordable option for potential homeowners. Congress has been considering many changes to FHA legislation, but with these remarks the NAHB urged Congress to allow the FHA greater flexibility in setting downpayment requirements, establish a mortgage premium pricing structure based on risk, which would reward borrowers of higher risk that establish a record of timely payments, extend the loan maturity limit to 40 years, increase the loan limit in areas with higher cost of living, and insure more “reverse mortgages”.
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