Mark-up Slated for FHA Reform Bill

The House Financial Services Committee will mark up a Federal Housing Administration reform bill next week, according to the committee chairman, Rep. Barney Frank, D-Mass.'This could be one of the best answers" for subprime borrowers, Rep. Frank said. The bill sponsored by Reps. Frank and Maxine Waters, D-Calif., allows the FHA to charge risk premiums to make its single-family program more attractive to traditional FHA borrowers and to reach subprime borrowers with credit scores below 560. However, these higher-risk borrowers would receive premium rebates if they regularly make their monthly payment over three to five years. "If you make your payments, you shouldn't have to pay more" than other borrowers, Chairman Frank said. He added that the additional revenues raised by the bill (through higher FHA single-family and reverse-mortgage loan limits) will be used to cross-subsidize premiums for higher-risk borrowers. And surplus FHA funds will be earmarked for an affordable housing fund, despite objections from Republicans. The committee also plans to mark up a bill that limits the chartering of industrial loan companies next week.