House Panel Passes FHA Reform Bill

The House Financial Services Committee has approved a Federal Housing Administration modernization bill by a voice vote that could make FHA single-family loans more attractive for low- and moderate-income homebuyers and help the faltering federal mortgage insurance program regain market share.The bill (H.R. 5121), sponsored by Reps. Bob Ney, R-Ohio, and Maxine Waters, D-Calif., gives the FHA more flexibility in setting premiums and downpayment requirements so it can be competitive in prime and subprime markets. "We have a chance with this legislation to bring FHA back into business and to restore the FHA product to its traditional market position," Rep. Ney said. "American families need safe options when purchasing a home, at a fair price." The FHA bill also includes a provision that reduces the financial requirements for state-licensed mortgage brokers to qualify as FHA loan correspondents. As approved, H.R. 5121 includes all the FHA reforms proposed by the Bush administration, and it is understood that committee leaders intend to push for a House vote on the bill in June.