There is aleady a backlash over the Housing Bill
So the ink is not even close to being dry on the 2008 housing bill when the first critical backlashes began circulating in Washington.
Some doubts about whether HUD will be able to complete the operating rules and regulations for the centerpiece of the entire legislation -- Who would have thought this. More rules more beurocats more goverment the $300 billion foreclosure-relief program -- And it gets better. Congress wants it done by the October 1 date mandated by Congress.
Folks at HUD have been quoted earlier in the week saying that it would be almost impossible for the agency to have the complicated and extensive underwriting criteria required to run the program in final form that quickly.
This, in turn, would delay Congress's efforts to reach out and save over 300,000 deeply distressed home owners by refinancing them into affordable, fixed-rate FHA loans.
The Democratic chairmen of the Senate and House committees that authored the "HOPE" refinancing program were incensed that HUD couldn't produce the operating rules in a more timely manner.
"The notion that this takes a normal bureaucratic response when you have this social and economic crisis is unacceptable," Rep. Barney Frank, chairman of the House Financial Services Committee told the American Banker, a trade publication. "I cannot believe that this would wait."
Then HUD Secretary Steve Preston told both Frank and Dodd, chairman of the Senate banking committee, that his guys would pull out all stops to have the FHA rules ready by October 1 to say the least that would be super fast by usual federal rule-making standards. Dodd later met with Preston and said that HUD staffers feel they can do it. What would you expect him to tell his bosses? I mean lets face it these guys sign his check. So lets face it, what comes out will be wrong and have to be redone again. Further adding to the clost of software updates
Meanwhile, the big boys are complaining that the final housing legislation is forcing them to do new software updates to their computer system for the second time within a short time, which can't be cheap in order to participate with FHA refinancing or new home purchase programs.
That's because Congress clamped a one year moratorium on the use of "risk based pricing" underwriting for all FHA loans, barely weeks after FHA itself required lenders to switch their systems to a risk-based program using credit scores and varying downpayment amounts.
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