Dem FHA Bill Would Limit Zero-Down Loans

Only first-time homebuyers could get a zero-downpayment loan from the Federal Housing Administration or come to the closing table with less than 3% down under an FHA reform bill sponsored by House Democrats.Others seeking to purchase a home or refinance still have to meet the FHA's current 3% cash requirement under the reform bill (H.R. 1852) introduced by Rep. Maxine Waters, D-Calif., and Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee. Nearly 80% of FHA purchase-mortgage originations financed first-time homebuyers in fiscal year 2006. The Bush administration supports an FHA reform bill (H.R. 1752) sponsored by Rep. Judy Biggert, R-Ill., that eliminates the 3% cash requirement and gives the agency more flexibility in setting mortgage insurance premiums. "While there are differences between the two bills," FHA Commissioner Brian Montgomery said, "I look forward to working with Chairman Frank, Congresswoman Biggert, and the other members of the Financial Services Committee as we try to achieve our common goal of increasing homeownership opportunities through a modernized FHA."