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House passes FHA modernization bill

Senate expected to grapple over loan limits, housing fund

The House of Representatives passed legislation Tuesday that would expand the pool of borrowers who can take advantage of FHA loan guarantee programs, which have become the centerpiece of the Bush administration's efforts to help homeowners avoid foreclosure. HR 1852, The Expanding American Homeownership Act of 2007, would lower down-payment requirements and raise the limits on the size of loans insured by the Federal Housing Administration (FHA). The bill would also allow FHA to serve borrowers who would not previously have qualified because of their credit scores by charging them higher, "risk-based" premiums. But the version of the bill passed by the House in a 348-72 vote includes some provisions -- including a plan to divert surpluses from the loan guarantee program into an affordable-housing fund -- that are opposed by the Bush administration (see Inman News story). An amendment to the bill by Rep. Barney Frank, D.-Mass., would raise the FHA single-family loan limi...