House Passes FHA Reform Bill

The House has passed a Federal Housing Administration reform bill by a 348-72 vote that raises the FHA loan limit to over $700,000 in high-cost areas and allows the FHA to reach more subprime borrowers by charging risk-based premiums.FHA Commissioner Brian Montgomery welcomed the House action despite concerns that the House bill (H.R. 1852) raises the FHA loan limits too high. The Bush administration proposed raising the FHA loan limit from $362,790 to the $417,000 conforming-loan limit in high-cost areas. But the House approved a bipartisan amendment by voice vote that raises the maximum FHA loan limit to 175% of the conforming loan limit, or $730,000, to address problems in the jumbo loan market. Commissioner Montgomery noted that the administration strongly opposes such a loan limit hike but said he expects the Senate bill to be more compatible with the administration's position. "We look forward to seeing what the Senate does, and we will try to work out those differences in conference committee," Mr. Montgomery told reporters.