Home loan borrowers of limited means might again be able to obtain FHA-backed home loans instead of going to more expensive subprime lenders if Congress gives the Federal Housing Administration greater discretion in deciding what types of loans it will back. In areas of the country where the cost of housing is high, the FHA has lost market share because of limits on the size of loans it can insure. And a statutory requirement of a 3 percent down payment for FHA-insured loans is difficult for some low-income buyers to meet. The Expanding American Home Ownership Act of 2006 would address those issues by allowing the FHA to insure bigger loans with more flexible terms, including no-money-down products. Approved by the House in a 415-7 vote in July, HR 5121 could help FHA regain the market s...
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