In the midst of the sub-prime loan debacle, Inman News reports that the Secretary of Housing and Urban Development (HUD) has put before Congress a plan for modernizing FHA loans. In recent years FHA loans have been all but extinct in states with high housing costs, due to their maximum loan limits. Buyers turned to riskier adjustable-rate loans as a means to get into home ownership without, in some cases, as illustrated by the increase of mortgage defaults, full knowledge of how high their payments could reach when the loan adjusted.The proposed plan would allow for higher loan amounts, eliminate the mandatory 3% down-payment and would be flexible with more options. Californians looking to purchase a home with little or no down-payment would certainly benefit from this new FHA loan over-haul; as would home-sellers by having a bigger pool of qualified buyers that are able to purchase their homes.
This important update to FHA home loans, could be a very vital component in keeping our housing market healthy by allowing more buyers safer loans that they can afford. Let your CA State Senator know that you think this is of importance to you. Look for updates in future posts.
