House Extends Simplified FHA Mortgage Calculation
September 19, 2000
Lowers Borrowing Costs for FHA, Rural Housing Service Homebuyers
The House has approved two housing bills managed by Rep. James A. Leach, chairman of the House Banking Committee, to save money for borrowers under Federal Housing Administration (FHA) and Rural Housing mortgage loan programs.
H.R. 5193, the FHA Downpayment Simplification Extension Act, introduced by Rep. Rick Lazio, chairman of the Housing Subcommittee, extends for 30 days an existing statutory provision which provides for a simplified calculation of downpayments by new homeowners closing on FHA-insured mortgage loans. The streamlined method provides savings for homebuyers and a calculation method uniformly understood by the mortgage industry and consumers.
H.R. 3834, the Homeowners Financing Protection Act, introduced by Rep. Robert E. Andrews, allows borrowers to refinance Rural Housing Service (RHS) single-family mortgage loans to take advantage of lower interest rates.
"According to the General Accounting Office, as of May 31, 2000, approximately 9,100 RHS loans exist with an interest rate of 13 percent or higher; 65,000 loans exist with an interest rate of at least 9.5 percent," Leach said during debate on the bill on the House floor. "It is clear that these borrowers would benefit from refinancing using the guaranteed program by lower interest rates and therefore lower monthly payments."
Both bills passed the House by voice vote.
Source: House Banking Committee