The federal government is working diligently to institute changes to the Federal Housing Administration (FHA) to help more homeowners and homebuyers qualify for FHA loan programs.  These loans are attractive for private banks to provide because they are insured by the government. 

FHA Reform bills have passed in both the House of Representatives and the Senate.  A consensus bill is expected to be signed by President Bush within the first few months of this year.  Exact details must be agreed upon, but a few of the big changes include raising loan limits and also lowering down payment requirements for FHA loans.  This will help first-time homebuyers, minority buyers, and people who do not qualify for conventional mortgages – including those living in high-cost areas.

To ease sub-prime adjustable-rate mortgage (ARM) adjustments, the Bush Administration announced late in 2007 a “Rate-Freeze Program” which is designed to help 1.8 million borrowers whose monthly payments are rising dramatically.  Anyone who may be affected can visit www.hopenow.com to learn more about the Hope Now Alliance of lenders, servicers, associations, and investors who are taking part in this voluntary rate-freeze agreement.

The Federal Reserve (Fed) has continued to do its part to help the housing and mortgage industries by lowering the federal funds and discount rates multiple times this past fall and winter.  The Fed also has been lending billions of dollars to banks to help infuse money into the economy.  To avert abusive lending the Fed is also proposing a much stricter set of rules for mortgage lending to prohibit giving people unaffordable loans, stated income loans, and loans with pre-payment penalties.

Source:   Gorman and Gorman