Nearly a dozen trade groups sent a joint letter to Congress urging FHA reform.
Passage of H.R. 512, the Expanding American Homeownership Act of 2006, would make the Federal Housing Administration more efficient and streamlined, the May 15 letter said.
The bill would particularly help narrow the homeownership gap among low-and moderate-income and minority families, according to the letter from the 11 industry trade groups, which included the American Bankers Association, the Mortgage Bankers Association and the National Association of Mortgage Brokers.
"Mortgage financing has changed significantly over the past 15 years, but FHA has been left behind with processes and rules that no longer work well with the private sector," according to the groups, which also included the National Association of Home Builders and the National Association of Realtors.
The bill calls for more flexible down payment options, higher FHA mortgage limits and extended loan terms to 40 years, according to the letter. It also includes updates to the home equity conversion mortgage program -- which would benefit members of the National Reverse Mortgage Lenders Association, which put its seal on the letter.
"Modernizing FHA will improve competition in the prime home loan mortgage industry and effectively assist the industry in combating abusive and/or discriminatory lending practices," the groups said.
IRS Ruling a Boost for FHA Reform
A recent IRS ruling that restricts the use of downpayment assistance has mortgage bankers pushing for FHA reform.
Clinton, Administration Want FHA Changes
WASHINGTON -- FHA reform is gaining support on both sides of the political fence, with the Bush administration and a prominent senator from the other side of the isle supporting changes at the agency.
Changes Could Transform FHA
Hoping to increase government-insured mortgage originations and cash available for new homes, mortgage bankers and homebuilders have thrown their support behind FHA-insured loan reforms proposed by the Bush administration.