Zero-Down Cost Estimate 'Way Off'?

A Congressional Budget Office estimate on the costs of running a federal zero-downpayment mortgage program is way off the mark, according to a new estimate by the Department of Housing and Urban Development.In reviewing the provisions of a Federal Housing Administration zero-down bill (H.R. 3755), HUD estimates that the program would produce $27.6 million in revenues over a four-year period (2006-2009) -- not a $5 million loss, as estimated by the CBO. HUD acknowledges that the zero-downpayment loans would have a claim rate twice as high as standard FHA loans, which have a 3% downpayment requirement. Nevertheless, FHA Commissioner John Weicher told Rep. Bob Ney, R-Ohio, in a July 14 letter that the zero-down program could be run on a break-even basis. Rep. Ney is urging the CBO to take a second look at its estimate in light of HUD's findings. The House Financial Services Committee approved H.R. 3755 in June. But the $500 million cost estimate has prevented committee leaders from moving the bill to the House floor for a vote.