The president of the Mortgage Bankers Association said he was pleased that the Department of Housing and Urban Development will implement immediate changes voted by Congress to raise Federal Housing Administration-insured loan limits and to end limitations on financing closing costs.

Angelo R. Mozilo, who also is president and chief executive officer of Countrywide Funding Corp., Pasadena, Calif., predicted the changes would help borrowers and the FHA. which would enjoy increased volume and insurance premiums.

"I applaud HUD for the appropriate and quick implementation of the changes dictated by the legislation," Mozilo said.

The Bush administration had opposed the changes and there was some concern that HUD would delay implementation. They were contained in the bill appropriating funds for HUD and the Department of Veterans Affairs, which was signed Oct. 6 by the president.

Alfred A. DelliBovi, deputy secretary of HUD, said a mortgage letter announcing the end of the 57% limit on financing closing costs would go out early this week. He explained that the increase in loan limits had to be announced in the Federal Register, which could take a few weeks because a backlog.

The loan limits were increased 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 previous limit of $124.875.

On the negative side. VA announced it also will implements bill that will tend to increase the number of so called "no-bids." Under the law, when the VA is notified of a foreclosure sale, it determines whether to establish a net value and acquire the property or make no bid and pay the guaranty fee. the bill changes the calculation of costs in a manner that tends to increase them.

The net effect for lenders is that they will be forced to incur the expense of trying to sell the properties at a high enough price to make up the difference between the unpaid loan amount and the guaranty fee.

Not all lenders favored the FHA changes. The Savings and Community Bankers of America opposed the loan limit increases on the ground that that they opened the programs to higher-income borrowers.

MBA has disputed that analysis. Mozilo said there is nothing in the law that says FHA programs must be limited to low-and moderate-income borrowers, though the loan limits, including the current increases, tend to do that.

In addition to prevailing on the loan limits and the financing of closing costs, the MBA pushed successfully for a decrease in insurance premiums. HUD stopped charging an extra 0.05% on refinancings in the wake of a MBA campaign against it.

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