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Waters Introduces Legislation to Make FHA Mortgages More Affordable

Today, Congresswoman Maxine Waters (D-CA) introduced the Making FHA More Affordable Act, a bill to repeal the requirement that Federal Housing Administration (FHA) borrowers pay mortgage insurance premiums for the life of the loan, and reinstate the FHA’s previous policy of only requiring borrowers to pay premiums until the outstanding principal balance reaches 78 percent of the original home value.

“Families who take out home loans through the Federal Housing Administration (FHA) should not be unnecessarily burdened with mortgage insurance premiums for the life of the loan,” said Ranking Member Waters. “My bill would remove this unfair requirement for FHA borrowers and help to make mortgages more affordable for hardworking Americans.”

The FHA has required borrowers to pay the annual premiums for the life of the loan since June 3, 2013. Before that, the FHA was aligned with the private mortgage insurance industry in charging premiums only until the outstanding principal balance reached 78 percent of the original home value.

The bill is supported by the National Association of Realtors (NAR), the National Association of Real Estate Brokers (NAREB), the Community Home Lenders Association (CHLA), the National Consumer Law Center (NCLC) (on behalf of its low-income clients), the National Housing Conference (NHC), the National Community Reinvestment Coalition (NCRC), the California Reinvestment Coalition (CRC), and the National Association of Hispanic Real Estate Professionals (NAHREP).

“Low and moderate-income homebuyers often look to FHA, but policies like the “life of loan” mortgage insurance make it harder for those creditworthy buyers to close the deal,” said William E. Brown, President of the National Association of Realtors. “Lifetime mortgage insurance requirements also encourage strong borrowers with substantial equity in their home to refinance into a conventional mortgage product. That represents a missed opportunity to further strengthen the FHA portfolio. This legislation will take unnecessary burdens off the backs of homebuyers who look to FHA for a mortgage. Realtors know that’s good for consumers and the housing market broadly, and we thank Congresswoman Waters for her leadership on this important issue.”

“Returning to a more reasonable FHA premium policy is the right move now that home prices and mortgage markets have stabilized and the FHA’s financial position is strong. It helps homeowners build wealth and save for the future, so they’ll be better prepared for the next economic downturn,” said Ethan Handelman, Acting CEO of the National Housing Conference.

“Through this legislation, Representative Waters is championing homeownership opportunity. We encourage immediate passage of the Making FHA More Affordable Act,” said John Taylor, President and CEO of the National Community Reinvestment Coalition.

For more information, view the legislation and a one pager.


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