A key House subcommittee passed legislation Wednesday that would allow the Federal Housing Administration to insure zero-down mortgages, but with certain conditions attached.The bill, "The Zero Downpayment Act of 2004" (H.R. 3755), passed the Housing Subcommittee Wednesday afternoon. It includes an amendment mandating that the Department of Housing and Urban Development suspend the program if the claim rate on FHA-insured zero-down loans exceeds 3.5%. Introduced by Rep. Patrick Tiberi, R-Ohio, H.R. 3755 also requires consumers using the program to receive pre-purchase counseling. Before the FHA can insure the loans, HUD must run the mortgages through its new automated underwriting system. Legislators say they believe the bill would help 150,000 additional families become homeowners.

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