www.lasvegasmtg.com Report: H. R. 5072 FHA Reform Act of 2010 Passes the House
www.lasvegasmtg.com Report: H. R. 5072 FHA Reform Act of 2010 Passes the House has been adopted by a voice vote and now will go to the Senate for debate. Some of the key components of the FHA Reform Act of 2010 (H.R. 5072) which has been noted in many blogs is the Congress setting the annual premiums loan limits currently at .55% to 1.5%. It might be noted that FHA as stated they are seeking the ability to have the 1.5% increase but would initially only increase it to .9% similar to current private Mortgage Insurance costs for a conventional loan.
In a 2009 audit of FHA UFMIP it was apparent that FHA would require a increase in the premium's due to the mandated 2% reserves required by Congress. FHA has noted that the primary reason for the shortage was a direct result of the tax rule changes allowing Down Payment Assistance programs from 2004 to 2006 when they were abolished. With 650,000 DPA loans during this time 70% of the loans are in default. Last month the UFMIP was increased from 1.75% to 2.25%, but the annual premium increase has to be approved by Congress.
Here are other provisions to the FHA Reform Act of 2010 that I think needs to be focused on as much as the increase in the annual premium.
1. Sponsor Waters (CA) Increase Loan Limits in micro-politan counties experiencing significant growth.
2. Cardonza (CA) Prioritizing foreclosure counseling in hardest hit areas in foreclosures.
3. Cao (CA) to require information to borrowers on credit risks and financial counseling services.
4. Bean (IL) HUD to provide a annaul report on financial stability and to provide recommendation on the minimum required Down Payments. It would give the authority to HUD to make changes to the minimum investment requirements.
5. Garrett (NJ) Would require the Down Payment to be 5% up from the current 3.5% minimum. Closing costs would be prohibited from being included in the loan.
6. Price (GA) Would cap HUD at 10% of all originated loans until 2012. HUD has 90 days to provide Congress a plan of action.
7. Turner (OH) to remove HUDs emergency authority to increase loan limits from $720,000 in high cost areas and cap the maximum loan limit to $500,000.
8. Clarke (NY) Require HUD to provide to the GAO analysis of HUD's loss mitigation program particularly low income borrowers.
9. Edwards (TX) Would require borrowers to state they have not been convicted of sexual offense with a child to get a FHA loan.
I think item # 4, 5, 6, 7, would have a greater affect on getting a FHA loan then the increase in the annual premium. I would also feel that item #9 is going to be extremely difficult and most people would find it offensive to have to certify they are not a child molester in order to get a home loan.