The Federal Housing Administration’s (FHA) admission that it will need a $1.7 billion bailout for fiscal year 2013 puts more pressure on Congress to pass an FHA reform bill. Both the House and the Senate banking committees have passed reform bills but they are very different. A collaboration of bipartisan support, the Senate bill primarily strengthens and clarifies the FHA’s ability to regulate lenders and manage the mortgage insurance fund. As nationalmortgagenews tells MHProNews, the House bill restricts FHA loans to first-time homebuyers as well as low-and-moderate-income buyers, and additionally raises the down payment to five percent. Known as the Path (Protecting American Taxpayers and Homeowners) Act, it also decreases the 100 percent FHA mortgage insurance coverage to 50 percent of the loan after five years. In spite of the stated reluctance to bailout another Federal agency, analysts do not expect reform to be considered until next year.
(Image credit: Federal Housing Administration)