For years, the Federal Housing Administration loan programs had been looked down on by borrowers and lenders because of statutory and regulatory constraints the limited the agency's ability to carry out its mission of offering reasonable loan programs to the American working class.
The recent enactment of H.R. 3221 has eliminated many of the problems and has made FHA loans a very viable way to purchase a home. According to National Association of Home Builders President Sandy Dunn, "H.R. 3221 will give the FHA greater flexibility to respond to the needs of borrowers, enable more working families to become home owners, expand affordable mortgage loan opportunities for seniors and allow the agency to play an important role in stablilizing the mortgage markets."
H.R. 3221, the Housing and Economic Recovery Act of 2008, while enabling the FHA to deliver a full range of mortgage products throughout the country by permanently raising the FHA loan limit to 115% of an area's median home price, with a maximum loan range from $271,050 to as high as $625,500 for those qualifying areas of the country.
Other incentives resulting from H.R. 3221 are the simplification of requirements for purchasing condominiums and an increase in the loan limits for reverse mortgages to seniors to as high as $625,000, The bill also reduces and caps the maximum fee lenders can charge seniors for an FHA reverse mortgage loan and effectively protects seniors by prohibiting lenders to compel the purchase of other financial service products in conjunction with reverse mortgages.
Another issue on the downside is that FHA will be allowed to charge higher mortgage insurance premiums, but at the same time, the bill places a one-year moratorium on the implementation of risk based mortgage insurance premiums.
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