The FHA reform bill did not pass the Senate last week. The Senate is out of session until the 3rd of December delaying further action until then. There is much optimism that the bill will pass before the end of the year, expectations are of a final bill by both Houses of Congress in Mid December.
The Senate Banking Comittee accepted a 12 month moratorium on FHA’s risk-based premium proposal
The Senate leadership had hoped t o pass the bill through the “hotline” process which is a streamlined process, however some Senators were unwilling to lift their “hold” on the legislation. The “hotline” process requires unanimous consent from all Senators to allow for a vote on the bill.
The good news is that most of the Senators’ concerns were primarily procedural and the “holds” could be lifted at any time.
It is not expected that there will be any significant changes to the bill. Below are key elements of the bill and the current likelihood of implementation.
*Downpayment/Cash Investment – allowing for 100% LTV purchase with a 1.5% cash investment. Right now this is considered very likely with a small possibility to increase the cash investment to 2.0%.
*Mortgage limit (“floor”) raised from 48% to 65% of GSE limit $271,050 – almost guaranteed.
*Mortgage limit for “high cost” areas increase to $417,000 – almost guaranteed and could go as high as $500,000.
Reverse Mortgages – remove cap on volume, raise maximum loan limit to $417,000 and allow reverse mortgages to be used for home purchases – almost guaranteed.
They will also need to work out the differences between the House and Senate provisions on seller funded downpayment assistance programs. We have not heard how that will work out yet.
Right now FHA loans are helping a lot of people purchase homes and refinance into better mortgages – the rates are great – even when you require a manual underwrite or can’t get a scorecard accept.
Call us with questions,
Theresa & Ray