FHA Update-House Panel Passes FHA ‘Underwater’ Bill
May 5, 2008 | Brian Lebars
By a 46-21 vote, the House Financial Services Committee has approved a bill that provides the Federal Housing Administration with $300 billion in loan commitment authority to refinance “underwater” mortgages. The bill, crafted by the committee chairman, Rep. Barney Frank, D-Mass., provides mortgage investors/servicers with an option to refinance struggling borrowers into FHA-insured loans if they agree to write down the principal amount to 85% of the appraised value. The program is designed to be voluntary, and a new board composed of top government officials would oversee it. The Senate Banking Committee is slated to mark up a similar FHA refinancing bill on May 6.
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