Congress Working on Subprime Mortgage Mess

In the wake of the mortgage mess, Congress is putting together a package to reform the FHA and give lower income borrowers an alternative to those crazy subprime loans. According to CNN, the bill would:

Permanently raise loan limits. The economic stimulus bill passed in February temporarily increased the limit on loans eligible to be FHA-insured. The ceiling until Dec. 31, 2008 is now $729,750, up from the normal $362,790 for single-family homes. Those are the ceilings for high-cost areas. The ceiling is lower in low-cost housing markets.

Reduce down payment requirements. Homeowners would no longer be required to have 3% equity or the cash equivalent to get an FHA-insured loan. The House bill would allow borrowers to get an FHA-insured loan with 0% down if they can show they can afford the mortgage payments. The Senate bill requires 1.5%.

Make it easier for borrowers in high-cost loans to refinance. The House bill would let some homeowners in default or at risk of default refinance into an FHA-insured loan.

Here are some of the bills in full-color, if you want to get your snooze on:

• S.1805 FHA Loan Limit Adjustment Act of 2007
• H.R.2139 FHA Manufactured Housing Loan Modernization Act of 2007
• H.R.1723 Fair FHA Appraisals Act of 2007
• H.R.568 Reverse Mortgages to Help America's Seniors Act
• H.R.127 FHA Multifamily Loan Limit Adjustment Act of 2007