Historic day for FHA
Brian Montgomery, the the Housing and Development assistant secretary who heads the FHA, said the legislation could enable more than 200,000 homeowners whose loans are excluded from federal backing to come under the agency’s umbrella.
“This is a historic day for FHA,” Montgomery told reporters after the vote. He said the administration remains concerned about specific provisions — notably much higher limits in the bill for mortgages that could be insured y the agency, as much as $729,750 in high-cost areas compared with the current $362,000. However, Montgomery added, “I feel optimistic we’ll work out these differences” as the legislation moves through Congress.
In the Senate, the Banking Committee is expected to vote Wednesday on a version of the legislation proposed by panel chairman Sen. Christopher Dodd, D-Conn., and its senior Republican, Sen. Richard Shelby of Alabama.
The House measure is Congress’ first stand-alone bill passed in response to the mortgage-market tumult of the summer, which came amid a rising tide of defaults and foreclosures. The Senate last week approved spending legislation that includes $200 million in aid to nonprofits and other groups that offer counseling and information to help homeowners avoid foreclosure.
The bad news deepened again on Tuesday. Research firm RealtyTrac Inc. said the number of foreclosure filings reported in the United States last month more than doubled compared with August 2006 and jumped 36 percent from July — a trend signaling that many homeowners are increasingly unable to make timely payments on their mortgages or sell their homes amid the housing slump.
An estimated 2 million to 2.5 million adjustable-rate mortgages are scheduled to “reset” this year and next, jumping from low “teaser” rates for the first two or three years to much steeper rates that could cost borrowers their homes. The wave of resets could crest during the presidential and congressional election campaigns next year, and the issue has brought politically charged debate in recent weeks over possible responses by the government.
Government officials and real-estate industry interests maintain that the FHA, which now backs some 3.7 million loans in the event of default, is hamstrung by existing law. The size of mortgages the agency can insure is often too small to attract borrowers in expensive areas such as California and the Northeast — reducing the FHA’S share of the home-loan market to around 4 percent from 19 percent a decade ago.
