House Passes Downpayment Aid, FHA Fix

The House has approved final passage of a housing bill that creates a downpayment assistance program, fixes a glitch in the Federal Housing Administration hybrid loan program, and increases the FHA multifamily loan limit in high-cost areas.The bill (S. 811) includes the president's American Dream Downpayment Assistance program to help low-income renters purchase their first home. It authorizes $200 million annually for downpayment and closing cost assistance. S. 811 also fixes the FHA hybrid adjustable-rate mortgage program. It would remove a one-percentage-point cap on the initial interest rate adjustment for a five-year hybrid. The FHA is expected to issue its hybrid ARM regulations early next year. The housing bill also increases FHA multifamily loan limits in high-cost areas such as New York and San Francisco by changing the statutory maximum adjustment percentages from 110% to 170%. S. 811 now goes to President Bush for his signature.