Mortgage lenders won and lost in the bill (H.R. 5679) to appropriate funds for the departments of Housing and Urban Development and of Veterans Affairs. The lenders got higher loan limits for Federal Housing Administration-insured loans plus elimination of HUD authority to limit the amount of closing costs that can be financed.
They lost on the VA side, however, when the House accepted Senate language that will increase the incentive for the VA to pay a lender only the guarantee fee and make the lender responsible for disposal of the property. Unlike some of the other 13 appropriations bills, President Bush is expected to sign this one.
Meanwhile, mortgage lenders were watching anxiously as the 102nd Congress tried to finish work by Oct. 3 on other major legislation, including the tax bill, bankruptcy legislation and the measure that would establish a new regulatory regime for the government-sponsored housing enterprises.
Both Senate and House versions of the HUD/VA appropriations bill contained provisions that increased limits on FI-IA-insured loans to 95% of an area's median home price up to 75% of the loan limits for the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. That works out to a new limit of $151,725. compared with the FHA limit of $124,875.
This will be a boon to lenders and borrowers in highcost locales. In the San Diego area. for example. the average loan amount is about $156,000.
The Senate accepted a House provision that. in effect. would end HUD's practice of limiting to 57% the amount of closing costs that may be financed.
Not all lenders favored the changes. The Savings and Community Bankers of America opposed them on the ground that FHA programs were not designed for higherincome borrowers.
The VA provision opposed by lenders would tend to increase the amount of so-called 'no-bids.' Under the law. when VA Is notified of a foreclosure sale, it determines whether to establish a net value and acquire the property or whether to make no bid. but pay the guarantee fee.
The Senate language accepted by the House changes the calculation of costs of acquisition by vain a manner that would tend to increase them.
The net effect for lenders is that they will be forced to incur the expense of trying to sell the properties to make up the difference between the unpaid loan amount and the guarantee fee.
Meanwhile. the Senate continued to make progress on its version of the Revenue Act of 1992 (H.R. 11). Though there is substantial agreement between both houses on many provisions of importance to mortgage lenders. it is highly possible that the legislation will fall victim to campaign year politics.
President Bush. by renewing his promise not to raise taxes. presumably would be compelled to veto either version of H.R. 11 because they do increase taxes on certain categories of taxpayers (see page 9 for summary of real estate-related provisions).
The fate of the GSE bill still is undecided. The Senate and House passed different versions (H.R. 2900 and S. 2733). but because of a parliamentary maneuver. the two houses could not simply go to conference on their differing bills. Staffs of the two banking panels are attempting to work out a compromise that would be quickly acted upon by the committees and the respective houses.
There still is disagreement over some important provisions. including the authority of the regulator to approve new products Fannie Mae and Freddie Mac may want to offer (see page 9 for summary of provisions and The Mortgage Marketplace. Sept. 14. page 1. for story on negotiations).
A last-minute win for mortgage lenders may come as a result of action by Rep. Jack Brooks. D-Texas. chairman of the House judiciary Committee.
The Senate June 17 had passed a bill (S. 1985) to reform the Bankruptcy Code, but it had been stalled before Brooks' panel.
Brooks has decided to move on at least portions of the legislation and the lenders hope it will include a ban on mortgage 'cram-downs' in Chapter 13 cases (see page 9 for summary orS. 1985).
One piece of legislation that seems dead for the year is a bill (H.R. 4973) designed to broaden membership in the Federal Home Loan Bank System.
Though its sponsors. Reps. Stephen L. Neal. D-N.C.. and Richard H. Baker. R-La., were promised a markup on the measure by Chairman Henry B. Gonzalez. DTexas. of the House Banking Committee. none has been set.
They lost on a 4-3 vote of the Rules Committee to get their proposal considered as an amendment to the Housing and Community Development Act (H.R. 534). That bill reauthorizes several housing statutes.
Despite their apparent lack of success in getting a vote on the bill. Neal and Baker are credited with pushing the debate over FI-ILB reform much farther along than it would have gone without their efforts.
They persuaded Gonzalez to hold three days of hearings in June that brought a wide spectrum of experts together to examine the problems.
The Treasury Department and the Office of Thrift Supervision urged that any action be postponed until completion of a study ordered in both the Senate and House versions of the GSE legislation.