AREAA Adds Provision into the Senate Passed FHA Modernization Act of 2007
(reprinted from www.areaa.org)

In an effort to broaden financing options for first time homebuyers and current homeowners with adjustable rate mortgages, the Senate has passed the FHA Modernization Act of 2007 last month. The bill aims to increase maximum loan amounts, decrease minimum down payment requirements, implement risk-based pricing in the foreseeable future and improve foreclosure prevention/post purchase counseling programs.

Additionally, AREAA was successful in leading the effort to include a legislative provision requiring HUD to carry out a pilot program to establish an automated solution for borrowers who have insufficient credit histories for determining their creditworthiness. The use of alternative credit ratings such as rent, utilities and insurance payments will assist many Asian Americans and immigrants as well as first time homebuyers in qualifying for FHA insured mortgages. Often times these borrowers must look to less affordable unconventional mortgage programs, regardless of their income or assets, due to a lack of traditional credit history. AREAA believes that this provision will help more of our members and support our mission of expanding housing opportunities.

AREAA was also successful in attaching the same pilot language into the House of Representatives’ FHA bill last year. Once the House and the Senate agrees on a single FHA bill, it is expected that the President will sign the bill into law.