RISMEDIA, July 6, 2010—The House of Representatives recently passed the FHA Reform Act (H.R. 5072). The bill, sponsored by Representative Maxine Waters (D-Calif.), would give authority to the Federal Housing Administration (FHA) to increase premiums (a.k.a. mortgage insurance) on loans guaranteed by the FHA. It passed by a vote of 406 to 4 and now heads to the Senate for a vote.
The FHA does not make home loans, it insures lenders against mortgage defaults. As a matter of fact, the FHA insures nearly one-third of all new mortgages in the U.S. This is up from just 4% percent in 2006. Due to the high number of mortgage defaults that have occurred over the past few years, the FHA reserves have fallen below the limit allowed by law. The proposed bill hopes to bolster the FHA reserve level.
FHA-backed loans are common among first-time home buyers because, unlike the traditional mortgages of today, FHA loans only require that you have a 3.5% down payment. However, because the down payment requirement is so low, a borrower is required to pay both an upfront mortgage insurance premium at closing (currently at 2.25%, up from 1.75% in April 2010) and an annual mortgage insurance premium, paid monthly. (More …)
Thursday, 20th May – All eyes were on the Canadian Dollar (CAD) on April 6th as it hit parity against the US Dollar (USD). However the run seems to be over as commodity prices drop off and the CAD falls to 0.9350.
