We recieved information from GAR on Georgia Senator Johnny Isakson’s new bill. Please take a few moments and see what he is proposing.
WASHINGTON, DC – Yesterday, Senators Robert Menendez (D-NJ) and Johnny
Isakson (R-GA) introduced a bipartisan bill – the Homeownership
Affordability Act of 2011 – to allow the Federal Housing
Administration (FHA), Government Sponsored Enterprises (GSE) and the
Veterans Administration (VA) to insure home loans at their current
maximum levels for an additional two years, until December 31, 2013.
The legislation is also co-sponsored by Senator Dianne Feinstein
(D-CA).
In 2008, to aid the weak housing market, Congress increased the
maximum loan limit for the FHA, GSEs and the VA to 125% of local
median home prices. Those limits, if allowed to expire on September
30th for the FHA and GSEs and on December 31st for the VA, could set
back the still-weak housing market even further.
“Allowing these limits to expire would be bad medicine for our economy
at a time when we need a booster shot,” Senator Menendez said. “New
Jersey has some of the highest home prices in the nation and allowing
these limits to lapse would hurt middle class homeowners and
prospective buyers. The effects could be terrible.”
“Allowing existing loan limits to expire during this difficult
economic time would make a struggling housing market even weaker. I am
also concerned that failing to extend these limits will make it even
more difficult for the average homebuyer get a mortgage and buy a home
when credit is already tight,” said Isakson. “I am pleased to join my
colleagues in supporting the Homeownership Affordability Act because
it is critical for the recovery of the housing market, which is the
foundation of our economy.”
“California counties would see loan limits for government financing
plunge by as much as $246,000, making loans more expensive and harder
to come by for many homebuyers,” Senator Feinstein said. “While I
recognize the need for comprehensive housing finance reform,
California’s housing market is too unstable to make arbitrary
decisions that could have detrimental effects on home values.”
The effects of an expiration could be dramatic – access to mortgage
credit will be significantly impeded for many homeowners and buyers
across the country. If the limits are not extended, they would be
automatically lowered in 669 counties across 42 states and the average
decline in loan limits would be more than $68,000 per county. The
current limits are $729,750 or 125% of local median home prices for
single family residences across the country, but will drop back down
to $625,500 or 115% of local median home prices if the extension is
not passed.
The Homeownership Affordability Act of 2011 is paid for by increasing
the guarantee fees charged on the loans themselves. Guarantee fees,
or “g-fees”, are charged by loan guarantors such as the GSE’s to
lenders for bundling, servicing and selling the mortgage-backed
securities to investors and are similar to insurance. Additionally,
FHA audits for the past decade have shown that larger loans actually
perform better and default at significantly lower rates than small
loans, so allowing these larger loans to be insured would actually
improve taxpayer returns.
Supporters include the National Association of Realtors, the Mortgage
Bankers Association and the National Association of Homebuilders.
Several bills have also been introduced in the House of
Representatives to maintain the higher loan limits.