HUD Seeks Title 1 Revamp

The Department of Housing and Urban Development is proposing a major revamping of the Federal Housing Administration Title One home improvement loan program that could clear the way for Congress to increase the Title One loan limit from $25,000 to $32,500. The HUD proposal would double FHA insurance premiums on home improvement loans and increase the net worth requirements for Title One correspondent lenders and dealers to $75,000. In addition, the FHA wants to prohibit lenders from disbursing funds solely to a dealer and require a "draw system" for any loans over $7,500. "The proposed rule would require that a lender disburse the proceeds either solely to the borrower or jointly to the borrower and dealer," HUD says in the proposed rule, which is expected to be published in the Federal Register any day. The proposed reforms are expected to satisfy objections raised by Rep. Rick Lazio, R-N.Y., to a proposed increase in the Title One loan limit during a markup of a homeownership bill (H.R. 1776) by the House Banking Committee two weeks ago. HUD's website address is http://www.hud.gov.