The US Senate just passed the new bill, ( SR. 2338) which includes sweeping changes in how HUD/FHA will operate. This new reform bill must be revised to include modifications from both the House and Senate, and then be finalized in the Federal Register for posting and made into law. A few of the proposed new features of the revamped FHA 203-B program will be.
1. Loan Amounts will be adjusted to the current Fannie Mae conforming mortgage limit of $417,000. This opens up this mortgage product to a lot more home buyers, including those at the higher priced homes that are move up buyers.
2. There will be a new risk based mortgage insurance program in place, but a moratorium for one year before it takes full effect. This means the monthly premium will remain at .50% of the loan balance.
3. Down payment requirements may go down from 3% required investment down to 1.5%.
4. Seller based and Private third party down payment assistance programs will be banished. Programs like Nehimiah and Ameridream will not be able to participate in any form of down payment assistance. This opens doors to governmental grant and down payment seconds that already exist, or will be supplemented.
5. The new FHA Secure program will offer fixed rate products on refinances for those who are need of help with ARM products that are adjusting, or interest only programs that are fully amortizing. The program is suppose to offer this bailout for those who have missed payments on their mortgage during this adjustment period. I am a little skeptical that this will not be revised in the new version of the mandate.
All in all this makes for a FHA program with a little teeth in it to assist those buyers who were left out in the cold with the demise of the subprime mortgage market, and should provide opportunities to those who can benefit from purchaing a home with FHA insured financing. Look alos for some changes in the Reverse Mortage program or HECM program as these are still in revision. Call me or write if you have any questions about this new mandate and reform bill which we hope will be in effect in the early part of 2008.
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