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Daily Real Estate News | August 31, 2007
FHA Policy Changes Would Ease Mortgage Crisis
The NATIONAL ASSOCIATION OF REALTORSŪ on Friday voiced support for an array of Federal Housing Administration policy changes that President George W. Bush has proposed to address problems in the mortgage industry.
The changes would help troubled borrowers refinance with FHA insurance, providing relief to home owners who have fallen behind in their mortgage payments because of so-called “exploding ARMs.”
The proposal also would allow more high-risk buyers to take advantage of better terms.
In addition, Bush plans to temporarily suspend the tax on mortgage debt forgiven by a lender, which would help borrowers work out lower loan balances and payments to avoid foreclosure.
“NAR has been advocating for many of these FHA changes since early 2007,” NAR President Pat V. Combs said in a statement. “We have encouraged both Congress and the U.S. Department of Housing and Urban Development to make meaningful changes to the FHA that would stem rising foreclosures."
Many borrowers who’ve been making their mortgage payments at the starter rate but were unable to keep them up after the loan reset have been unable to refinance through the FHA, Combs said. “But with this increased flexibility, FHA can now help many more families in jeopardy of losing their home.”
Combs said NAR will continue to urge Congress to act quickly to enact other FHA program changes that will help ease the current crisis and protect consumers.
FHA modernization should include increasing loan limits, eliminating or reducing the amount of cash down payments required for FHA loans, establishing risk-based pricing, revising prepayment penalty regulations, and increasing loss mitigation efforts.
NAR also supports separate legislation to abolish the mortgage cancellation tax that consumers are forced to pay when their mortgage is forgiven by their lender.
“NAR believes in a comprehensive effort to ensure this crisis will not repeat itself and alleviate the burden for many families who are currently facing the nightmare of losing their home,” Combs said.
— REALTORŪ Magazine Online
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