Senator Talent Introduces Measure to Boost Homeownership
June 22, 2006
U.S. Senator Jim Talent (R-Mo.) has introduced legislation that will modernize the Federal Housing Administration (FHA) to allow it to compete in today’s housing market and increase access to homeownership opportunities for low income buyers. Sen. Talent introduced the Expanding American Homeownership Act (S. 3535) to help first time homebuyers, minorities, and low income and moderate income individuals gain access to the resources necessary to become homeowners by increasing the maximum loan and amounts insurable by FHA.
“This legislation will help hundreds of Missouri families receive safe and affordable assistance to purchase a home and become part of the American Dream,” said Sen. Talent. “We will be able to increase minority homeownership and help seniors stay in their homes after retirement.”
The bill, cosponsored by U.S. Senators Mel Martinez (R-Fla.), Johnny Isakson (R-Ga.), and Saxby Chambliss (R-Ga.), will allow FHA to work with borrows to determine an appropriate home loan with greater options than previously offered by FHA. Homebuyers will be able to choose a downpayment amount, mortgage term, and premium options to fit their long-term goals.
“I applaud Senator Talent for introducing this priority legislation in the Senate,” said U.S. Department of Housing and Urban Development Secretary Alphonso Jackson. “I want to offer my full support and urge prompt Senate consideration of this bill that would introduce a new, modern-era FHA and offer hard-working American families a variety of safe homeownership options at a fair price.”
“FHA modernization is a top priority for MBA,” said Regina Lowrie, Chairman of the Mortgage Bankers Association (MBA) and President of Gateway Funding Diversified Mortgage Company. “We believe that the Senate must act on Senator Talent’s legislation this year to ensure that FHA programs can continue to be sound and relevant tools for lenders to use in serving the housing needs of American families who are unserved or underserved by conventional markets.”
- Key Provisions of The Expanding American Homeownership Act
- Loan Limits: Increases FHA maximum loan limits to reflect today’s housing market.
- Downpayment: Eliminates FHA’s three percent minimum cash investment requirement and downpayment calculation.
- Loan Terms: Increases the maximum loan term from 30 years to 40 years.
- Mortgage Insurance Premiums: Eliminates the 2.25 percent upfront and .55 percent annual premium caps allowing FHA to raise or lower the premium to match the borrower’s risk and eliminates the annual FHA premium charge after five years and 22 percent of property equity is received.
- Condominiums: Revises the definition of mortgage to insure condominiums as a single family unit rather than a multifamily project.
- Reverse Mortgages: Changes Home Equity Conversion Mortgage (HECM) requirements by eliminating the FHA cap on the number of loans that can be insured and sets a national loan limit at the GSE conforming rate so that all seniors have equal access to their equity.
- Manufactured Housing: Eliminates the portfolio insurance feature from the program and increases the loan limits to reflect the real cost of current manufactured housing.