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The plan of leading House Democrats to expand the role of the Federal Housing Administration goes further than the Bush administration’s plan to ease some of the mortgage market troubles that have rattled the economy. Both House lawmakers and the Bush administration want to allow the FHA, which insures mortgages for low- and middle-income borrowers, to back refinanced loans for borrowers who are delinquent on payments because their mortgages have reset to higher rates from low initial levels.
But the administration objects to a plan by Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, to raise the limit on the size of mortgages FHA can insure to $500,000 in high-cost areas of the country from the current $362,000. The White House said in a statement Monday that the program “should remain targeted to traditionally underserved homebuyers, such as low- and moderate-income families.” The administration wants the FHA loan limits to be raised to $417,000 in high-cost areas. In the Senate, meanwhile, legislation by Senate Banking Committee Chairman Christopher Dodd, D-Conn., and the panel’s senior Republican, Sen. Richard Shelby of Alabama, would raise the limit to $417,000. While FHA loans are insured by the government in the event of default, the mortgages themselves are made by major lenders such as Bank of America Corp. and Wells Fargo & Co., and are typically offered to investors as mortgage-backed securities by federal housing finance agency Ginnie Mae. The FHA currently insures 3.7 million loans. 2 Comments for 'Ahead of the Bell, FHA Overhaul'Leave a comment |
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