The National Association of Realtors (NAR) has applauded the U.S. House of Representatives for overwhelmingly passing Federal Housing Administration (FHA) reform legislation that would allow the FHA to adjust monthly premiums on mortgage insurance. HR 5072, the FHA Reform Act of 2010, would strengthen the FHA loan insurance program, while keeping it available and affordable to responsible homebuyers. Allowing the FHA to raise the monthly insurance premium would let FHA lower the upfront premium that places a burden on cash-strapped borrowers at closing.
“As the leading advocate for homeownership and housing issues, NAR is very pleased that FHA will be allowed to play its intended countercyclical role to provide qualified borrowers with access to prime credit. FHA is a critical part of our nation’s economic recovery,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz.
En route to passage, the House defeated an amendment that would have increased the FHA downpayment from 3.5 percent to five percent, which would have disenfranchised more than 300,000 potential homeowners and would not have contributed significantly to FHA cash reserves.
“The current 3.5 percent downpayment represents a significant financial commitment and sufficient investment to insure a borrower’s seriousness about homeownership,” said Golder. The proposed change could have an especially harsh impact on African-American and Hispanic borrowers, who traditionally have much lower accumulated wealth and have benefited from the opportunities offered by fully documented, standard FHA loans with low downpayments.
She also praised the FHA’s aggressive efforts to protect taxpayers and manage credit risk.
For more information, visit www.realtor.org.