The FHA Modernization Act of 2007 would

• Create a new, risk-based insurance premium structure for FHA that would match the premium amount with the credit profile of the borrower . It would replace the current structure, in which there is standard premium amount for all borrowers, while still protecting the soundness of its Insurance Fund. FHA would have the flexibility to charge higher-risk borrowers a slightly higher premium, and to charge a lower premium for low-risk borrowers. 
• Eliminate the current statutory three percent minimum down payment, reducing a significant barrier to homeownership . FHA's existing down payment requirement does not meet the demands of today's marketplace, where most first-time homebuyers put down two percent or less. The "new" FHA would offer a variety of down payment options. 
• Increase and simplify FHA's loan limits . FHA's loan limit in high-cost areas would rise from 87 to 100 percent of the GSE conforming loan limit and in lower-cost areas from 48 to 65 percent of the conforming loan limit. This change is crucial in today's housing market. In many areas of the country, the existing FHA limits are lower than the cost of new construction, eliminating FHA financing as an option for buyers of new homes in those markets. FHA has simply been priced out of the market in other areas, such as California, where FHA insured only about 5,000 home mortgages in all of 2005. 
• Expand the availability of the Home Equity Conversion Mortgage (HECM) program for the elderly by eliminating the cap on the number of these loans that FHA can insure. In addition, a new HECM for Home Purchase product would enable the elderly to move from the family home to housing more suitable for them as they age. 
• Make it easier for FHA to serve purchasers of affordable housing such as manufactured homes and condominiums. FHA would eliminate a feature of its Manufactured Housing program that limits how much a lender can recoup from mortgage defaults, providing greater incentive for lenders to make these loans. The proposal would also increase the loan limits to reflect the real cost of manufactured housing today. The legislation would also eliminate burdensome statutory provisions for insuring condominiums, which serve as one of the primary forms of affordable housing for first-time homebuyers.

To view the Press Release from Senator Dodd's office (bill sponsor), please click here.

About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, OH  and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with over 425 employees.  Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.