| Expanding American Homeownership Act of 2007 | | | | financials can cost between $2,000 to $20,000 for the |
| has been passed by the House and will most likely be | | | | average small broker to obtain. The audited financials |
| passed by the Senate and signed by the President | | | | required by FHA must be completed by a CPA that |
| after a few minor adjustments. This is the biggest | | | | has gone through a peer review and the minimum net |
| change to FHA that has occurred since it inception. If | | | | worth must be $50,000 according to FHA's stringent |
| the House has it's way, this would actually change the | | | | net worth calculation guidelines. Now, the 90% of |
| initial purpose of FHA from being an agency formed to | | | | brokers that did not have the time, money, and |
| help low income households to an agency that helps | | | | resources to put together audited financials, can put |
| almost all Americans to be able to own and keep their | | | | forth a surety bond in lieu of the audited financials. A |
| homes. | | | | surety bond is obtained through insurance companies |
| Increasing FHA Loan Limits | | | | and covers the consumer or third parties in a |
| Why am I saying this? FHA has always been geared | | | | transaction and is payable by the mortgage company |
| toward helping low income, poor areas, to be able to | | | | if drawn on by the state to pay a consumer or third |
| afford buying houses. The new bill that is now before | | | | party. The new bill proposes a bond between $50,000 |
| the senate proposes to increase the loan limits from | | | | and $100,000. Most analysts would agree that |
| $200,000-$350,000 to as high as $700,000 in areas | | | | something similar to this will be in the amended bill |
| with high median house prices. I personally don't know | | | | when passed by the Senate. |
| any low income people that own $700k houses, | | | | What will be the affect of this Bill |
| except for those individuals that lied on their loan | | | | Whether the FHA loan limit is increased to $700,000 in |
| applications and "stated" that they made $10,000 per | | | | some areas or $417,000, the bill will change FHA's |
| month as a janitor at Wal Mart and actually got the | | | | purpose dramatically. Many people will be looking to |
| loan. Fortunately, Bush has stated that he will not allow | | | | FHA as a place to obtain a loan that conventional |
| this to happen. He intends to keep FHA's purpose | | | | lenders are not able to provide. This is possible through |
| intact. I believe the Senate will do the same. Bush plans | | | | FHA's upfront mortgage insurance that is able to |
| on keeping the FHA loan limit at $417,000 or below. | | | | reduce the risk of higher debt-to-income and |
| We should see very soon. | | | | loan-to-value ratios. We will also see a huge surge of |
| Elimination of Audited Financials Requirement for | | | | advertising for FHA when the majority of mortgage |
| Brokers | | | | brokers are given access to be approved FHA |
| This is the second largest change to FHA. If this is | | | | brokers. Unfortunately, the House tends to think that |
| passed by the House, it would open the door to about | | | | this will be the solution to the current market problems. |
| 90% of the nations mortgage brokers that were | | | | This is a great start, but I think it will take much more |
| previously restricted from becoming an FHA | | | | than this to bring an adjustment to all of the lies and |
| Approved Broker (Loan Correspondent) due to the | | | | deception that occured in the last 5 years in the |
| cost barrier. Most people don't realize it, but audited | | | | mortgage industry. |