Passage of the “Expanding American Homeownership Act of 2007”

Legislation will reform FHA and help ease the fallout from mortgage market turmoil

Last newsletter, I mentioned initiatives proposed by President Bush to alleviate the current crisis in the home mortgage industry. One of those programs passed the U.S. House of Representatives on September 21.

H.R. 1852, the “Expanding American Homeownership Act of 2007,” was introduced by Congresswoman Maxine Waters (D-Calif.) and modernizes the FHA mortgage insurance program, providing American homeowners with safe, affordable mortgage alternatives that are fairly priced without resorting to teaser rates or negative amortization.

“An amendment by California Representatives Gary Miller (R-Calif.) and Dennis Cardoza (D-Calif.), and Barney Frank (D-Mass.) to H.R. 1852 increases the FHA loan limits to 125 percent of an area’s median home price, with a cap at $729,750. By contrast, the current FHA loan limit is only $362,790,” said California Association of REALTORS® President Colleen Badagliacco. “For high-cost states like California, this legislation is especially critical,” she said. “The median price of a home in California ranges from $841,660 in the San Francisco Bay Area to $709,720 in Orange County and $601,730 in San Diego.

“Passage of the ‘Expanding American Homeownership Act of 2007’ will give home buyers in high-cost areas like California an affordable mortgage alternative instead having to resort to significantly more expensive subprime loans,” she said. “The Frank/Miller/Cardoza amendment also will give the Secretary of Housing and Urban Development the flexibility needed to respond to changing market conditions.”

This legislation is now awaiting passage in the U.S. Senate before it goes to the President’s desk for an expected signature into law.