On the heels of a substantial influx of money and a rate cut by the Federal Reserve, both the House and the Senate have passed comprehensive homeownership bills to reform the Federal Housing Administration (FHA), a federally insured loan program that provides a source of affordable fixed-rate mortgages for eligible borrowers.

The problem is the House, the Senate and the President don't agree on what those reforms should be.

Nobody can say grass grows under the government's feet. FHA reforms were proposed last year, but stalled in the Senate. But the current sub-prime loan crisis, rising foreclosures, and constipated sales is clogging the drains of fluidity. The House and Senate have applied their versions of liquid plumber, and all that remains is for President Bush to sign off on the H.R. 1852 , the "Expanding American Homeownership Act of 2007" or the "Building American Homeownership Act of 2007" as it was called in the Senate, or some compromise of both.

Both bills call for a series of revisions to the federal loan program, including the following that were passed by the House Financial Services Committee (HFSC):

• Lower Down Payments. Authorizes zero and lower down payment loans for borrowers that can afford mortgage payments, but lack the cash for a required down payment.

• Housing Counseling. Authorizes more than double the current funding level for housing counseling, to help subprime homebuyers and borrowers late on mortgage loan payments.

• Subprime borrowers. Directs FHA to provide mortgage loans to higher risk (but qualified) borrowers, without authorizing unnecessary fee hikes on such borrowers.

• Reverse Mortgages. Enhances the FHA reverse mortgage loan program to help seniors pay for health and other expenses, by removing the loan cap to avoid program shutdowns, raising loan limits, and by reducing the maximum fee lenders can charge for these loans.

• Multifamily Loans. Raises FHA multifamily loan limits, so these loans can fully fund construction costs in high cost areas, and enhances sale of foreclosed FHA rental housing loans to localities, so that affordable housing can be maintained in local communities.

• Affordable Housing Fund. Authorizes up to $300 million a year from the bill's excess profits for affordable housing, instead of returning such funds to the General Treasury.

• Higher Loan Limits. Adopts the Frank/Miller/Cardoza amendment that would raise FHA single family loan limits, which now bar loans above 95 percent of the median home price in each local area and shut FHA out of higher cost home markets.

"The amendment raises the FHA loan limit in each area to the lower of (a) 125 percent of the local area median home price or (b) 175 percent of the national GSE conforming loan limit. The amendment also retains the bill's provision for a nationwide FHA loan floor of 65 percent of the GSE conforming loan limit, and gives HUD authority to raise these loan limit amounts by up to $100,000 “if market conditions warrant," said the HFSC in a release.

That's where the Senate parted ways -- it did not agree to the same terms, refused to authorize zero down loans, and refused to raise the conforming loan limit beyond the current $417,000 for high cost areas, among other changes.

That means there's no bill to present to President Bush to sign into law yet.

"Both Houses of Congress will have to meet to finalize and enact FHA reform this year," says Pat Combs, president of the National Association of Realtors.

Unless compromises are reached quickly, and are signed into law and not vetoed by President Bush, borrowers aren't likely to get more help from the FHA this year.

Published: September 20, 2007

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.