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I Do – FHA streamlined down payments become permanent

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FHA streamlined down payments become permanent

November 19, 2002



A bill that makes permanent a streamlined mortgage down-payment program for low-income borrowers was passed by the U.S. House on Thursday, the Mortgage Bankers Association of America (MBA) announced.

The passage of the Federal Housing Administration (FHA) Downpayment Simplification Act of 2002 is a significant step toward improving America’s affordable housing crisis, the MBA said.

In 1998, FHA created a probationary program that simplified the process used to determine down payments for low- to moderate-income home borrowers, the Wall Street Journal said. That process was scheduled to expire at the end of 2002.

“This is truly a victory for low- to moderate-income families in America in need of affordable housing, and it’s a win for the U.S. economy,” said Kurt Pfotenhauer, MBA’s senior vice president of government affairs.

The housing bill was passed by the Senate in October and has three components, the MBA said.

It amends the National Housing Act to permanently simplify the downpayment requirements for FHA-insured mortgages for single-family homebuyers.

The bill repeals the 50% increase in the Ginnie Mae guarantee that was scheduled to take effect in 2004, because it would have resulted in either a higher interest rate on the loan or a higher closing cost payment for borrowers with the lowest incomes. The increase also would have resulted in fewer people qualifying for home loans.

Beginning in 2003, the bill also will require the U.S. Department of Housing and Urban Development (HUD) to index multifamily mortgage limits each year to the consumer price index. This will create more affordable rental housing in parts of the country where multifamily housing construction has been stalled because of high costs.

At a panel discussion at MBA’s annual convention in Chicago last month, Dr. John C. Weicher, the HUD federal housing commissioner, said FHA made 201 multifamily commitments totaling $2.98 billion in financing last year on new construction and sub-rehab projects. That represents more than 39,000 units, the highest ever on record.

“Counting all our programs, we did $7.3 billion last year in multifamily, almost 150,000 units,” he said. “That’s up from $4.7 billion in 2001.”

He said almost $500 billion in FHA residential loans are currently outstanding, and that the agency served about 17% of the overall home mortgage market last year.

Christy Robinson is the editor of She received a bachelor’s degree in news-editorial journalism from The University of Texas at Arlington. Her work has previously been published in The Dallas Morning News.

email Christy at:

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