I get up this morning, after wondering all this time what had happened to the FHA Modernization Act, only to read that GOP Senators are blocking a vote on the bill! After it was rushed through the House by September 19, it reached the point where even national real estate columnist Kenneth Harney published a column asking anyone to please let him know what was going on. 

The Senate Banking Committee cleared the bill to go to the full Senate within one day of it being passed by the House, but Senate Banking Committee President Christopher Dodd did not send it to the floor of the Senate for further action until November 13th. More than a month after it was originally expected.

Now Senator Harry Reid, who I probably wouldn't agree with if he was pushing a bill to have the Sun come up tomorrow because I wouldn't trust his motives, cancelled a vote on the bill last Thursday due to Sen. Tom Coburn, R-Okla saying that he would object to the vote because he did not approve of raising the FHA limit to $417,000 and lowering the down payment to 1.5%. 

If you will read some of my past posts you will see more detail about why I don't think either of these changes would increase defaults. The short version is that FHA looks more closely at the reasons for a borrowers past credit and whether the problem has been solved, they verify income, and use fixed rate loans. In addition, HUD has a strong loss mitigation program. In spite of delinquencies increasing on all loans, and foreclosures increasing on conventional loans, FHA's foreclosure rate has gone down over the past couple of years. In spite of down payment assistance and borrowers with worse credit.

I welcome any comments, and would love for everyone to call their Senators and encourage them to do something about this bill before the end of the year.