U.S. Senate passes FHA reforms

WASHINGTON, Dec. 14 (UPI) -- Homeowners facing potentially higher mortgage costs could get help from the U.S. government more easily under a bill passed Friday by the Senate.

The bill, which passed on a 93-1 vote, would cut in half the down-payment requirement for Federal Housing Administration loans, MarketWatch reported Friday. Currently borrowers must provide a down payment of 3 percent of the total loan value.

The bill also would raise the maximum loan to $417,000 to assist homeowners in high-cost areas.

President George Bush was pleased by the action he said would provide FHA with "the additional flexibility it needs to provide families with a safe affordable mortgage financing options" to subprime mortgages, the White House said in a statement.

David Berenbaum, National Community Reinvestment Coalition executive vice president, said the measure is a "significant first step" and good for first-time home buyers -- but that the program needs to be expanded.

"It's our belief that it will have a limited impact on consumers who are facing foreclosures because it has rather strict underwriting standards," Berenbaum said. "For many consumers their credit has already been impaired because of the credit they have already received."