CHICAGO–The U.S. Senate has passed a FHA modernization bill (S. 2338) in response to the housing finance crisis, but there remain significant differences between the Senate bill and companion legislation passed earlier this year by the House (H.R. 1852). It will be up to a conference committee to hammer out the differences.
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The Senate bill proposes to increase FHA loan limits; specifically, it would allow the FHA to insure loans of up to $417,000 in high-cost areas. The current limit is $362,000. The bill would further reduce the minimum required down payment and permit homeowners who have fallen behind on mortgage payments to refinance into FHA-backed loans. It also would increase penalties for fraud.
