Panel OKs Bush Downpayment Program

The Senate Banking Committee has approved a house bill that would create a new downpayment assistance program, fix a glitch in the Federal Housing Administration hybrid loan program, and increase the FHA multifamily loan limit in high-cost areas.By unanimous consent, the committee approved the bill (S. 811) that authorizes the president's American Dream Downpayment Assistance program. The bill provides $200 million in downpayment and closing cost assistance to help low-income renters buy their first home. The House has passed a similar bill. The bill also fixes the FHA hybrid adjustable-rate mortgage program by removing a one-percentage-point limit on the interest rate adjustment for a five-year hybrid. The FHA is expected to roll out its hybrid ARM program this winter. The Senate bill would also increase the 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%. The House has passed a similar bill.