Home buyers in Rhode Island looking to utilize the FHA (Federal Housing Authority) mortgage loan program may have to put down more money if Representative Scott Garrett (Rep- New Jersey) has his way.
A bill introduced in the U.S. House of Representatives on Thursday, October 1, 2009, by Representative Scott Garrett, would increase the minimum down payment for Federal Housing Administration-backed home loans if passed, according to a report in from the Wall Street Journal. The bill would also restrict borrowers from using FHA loan money to cover their closing costs.
Congressman Garrett is attempting to limit the default of FHA mortgages by further tightening the lending guidelines for borrowers. A similar bill was passed last year that raised the minimum down payment requirement from 3% to the current 3.5% and eliminated seller funded down payment programs like Nehemiah and Ameridream.
According to Federal Reserve data, loans backed by the FHA jumped to 21% of all loans made in 2008, up from less than 5% in 2005 and 2006.
“It is true that the FHA de facto has replaced … the riskier part of the mortgage market,” Fed Chairman Ben Bernanke told Congress at a hearing on Capitol Hill Thursday. “It’s got a very high share now of new mortgages because it’s the only source of mortgages where down payments can be less than basically 20%. And so it is providing mortgage access to a large number of people who could not otherwise buy homes.”
If you are interested in purchasing a home in Rhode Island, call me today. I would be happy to help.
Lynda Mckenzie
Mortgage Consultant
Mortgage Master, Inc.
NMLS#137627/RI license#137627
Direct: 401-524-9796
E-fax: 401-537-9156
E-mail: lmckenzie@mortgagemasterinc.com
Web: http://www.mortgagemasterinc.com/lmckenzie
RI Loan Broker 95000655LBB01 / RI Lender License 2005 1876LLB01
