The Barney Frank Amendment or The FHA McMansion Bailout
The FHA reform bill (H.R. 1852) passed by the House and introduced to the Senate on Sept 19th already raises the FHA loan limit...
in high-cost areas from $362,790 to the $417,000 conforming loan limit. Which is the upper limit on the loans Fannie Mae and Freddie Mac can purchase.
HOWEVER, the House Financial Services Committee chairman, Rep. Barney Frank, D-Mass., and Reps. Gary Miller, R-Calif., and Dennis Cardoza, D-Calif., have QUITELY filed an amendment...
with the House Rules Committee to raise the maximum FHA loan limit not to exceed the lesser of (a) 125% of the local median home price OR
(b) 175% of the GSE conforming loan limit $417,000 , indexed in subsequent years, with additional HUD authority to raise limits by area or unit size by up to $100,000 if market conditions warrant.
For example, the lower or lesser of would be (a) 125% of the local median home price, which in LA County is $565K, or $706K at the moment.
Option (b) would push the limit to 175% of $417K = $729,750. In either scenario, FHA limits would be raised to over $700K in the LA County area.
This bill passed the House on Sept 18th. We respect Barney Frank's work, but we take exception to this piece of legislative pork.
HIS committees amendment amounts to a taxpayer bailout of the Jumbo Loan or high priced speculator, flipper & McMansion real estate markets.
A quick check at GovTrack shows the Senate's response:
Sep 19, 2007: H.R. 1852 Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
A check at the Senate Committee's site reveals that on the same date, the following press release was issued:
"Senator Chris Dodd (D-CT), Chairman of the Banking, Housing, and Urban Affairs Committee, today announced that the Committee passed the Federal Housing Administration Modernization Act of 2007."
Key Provisions of Senator Dodd's bill can be found here.
Most importantly, Senator Dodd's bill as currently proposed, strikes the Barney Frank McMansion Amendment and DOES NOT subsidize the $700K plus market:
Loan Limits Increased: Increases FHA single-family loan limits across the board, at both the high and low ends.
Sets the limit at 100% of the median home price of an area (up from 95%), or the GSE conforming loan limit (currently $417,000), whichever is lower.
Increases the minimum loan limit to 65% of the GSE limit, which is sufficient to purchase a newly constructed home.
The Nattering One muses...
We hope that Senator Dodd's committee "turfs" H.R. 1852 and that the Senate does not approve ANY bill which would bail out greedy speculators, flippers and McMansion owners.
Stupid is as Stupid Does... Anyone who attempted to profit and FAILED...
sold a residence and bought another, refinanced a residence to buy another, serial speculation or flipping, or bought multi residence units, should be shown no mercy.
Specific provisions should be made to ANY housing assistance bill:
to ensure that only first time buyers or those who refinanced ONCE and own a single home, as their primary residence, receive assistance.
Specifically, first time buyers or those who refinanced and OWN ONLY ONE single family residence during the period of 2002 to present...
AND are still using that home as their principal residence, AND did not subsequently refi or extract equity a second time from said home.
The above criteria eliminates all multi unit (renter assisted) investors, and multi home speculators or serial flippers...
and those that extracted equity for speculative gain or living beyond their means.
The only exceptions should be:
a first time buyer and or person owning one single family primary residence,
(a) that can PROVE they had to refi their home, in order to pay escalating property taxes on their home OR
(b) (low or fixed income & seniors) where it could be CONSTRUED that the loan terms or conditions are exhorbitant, onerous, AND were materially misrepresented.
in high-cost areas from $362,790 to the $417,000 conforming loan limit. Which is the upper limit on the loans Fannie Mae and Freddie Mac can purchase.
HOWEVER, the House Financial Services Committee chairman, Rep. Barney Frank, D-Mass., and Reps. Gary Miller, R-Calif., and Dennis Cardoza, D-Calif., have QUITELY filed an amendment...
with the House Rules Committee to raise the maximum FHA loan limit not to exceed the lesser of (a) 125% of the local median home price OR
(b) 175% of the GSE conforming loan limit $417,000 , indexed in subsequent years, with additional HUD authority to raise limits by area or unit size by up to $100,000 if market conditions warrant.
For example, the lower or lesser of would be (a) 125% of the local median home price, which in LA County is $565K, or $706K at the moment.
Option (b) would push the limit to 175% of $417K = $729,750. In either scenario, FHA limits would be raised to over $700K in the LA County area.
This bill passed the House on Sept 18th. We respect Barney Frank's work, but we take exception to this piece of legislative pork.
HIS committees amendment amounts to a taxpayer bailout of the Jumbo Loan or high priced speculator, flipper & McMansion real estate markets.
A quick check at GovTrack shows the Senate's response:
Sep 19, 2007: H.R. 1852 Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
A check at the Senate Committee's site reveals that on the same date, the following press release was issued:
"Senator Chris Dodd (D-CT), Chairman of the Banking, Housing, and Urban Affairs Committee, today announced that the Committee passed the Federal Housing Administration Modernization Act of 2007."
Key Provisions of Senator Dodd's bill can be found here.
Most importantly, Senator Dodd's bill as currently proposed, strikes the Barney Frank McMansion Amendment and DOES NOT subsidize the $700K plus market:
Loan Limits Increased: Increases FHA single-family loan limits across the board, at both the high and low ends.
Sets the limit at 100% of the median home price of an area (up from 95%), or the GSE conforming loan limit (currently $417,000), whichever is lower.
Increases the minimum loan limit to 65% of the GSE limit, which is sufficient to purchase a newly constructed home.
The Nattering One muses...
We hope that Senator Dodd's committee "turfs" H.R. 1852 and that the Senate does not approve ANY bill which would bail out greedy speculators, flippers and McMansion owners.
Stupid is as Stupid Does... Anyone who attempted to profit and FAILED...
sold a residence and bought another, refinanced a residence to buy another, serial speculation or flipping, or bought multi residence units, should be shown no mercy.
Specific provisions should be made to ANY housing assistance bill:
to ensure that only first time buyers or those who refinanced ONCE and own a single home, as their primary residence, receive assistance.
Specifically, first time buyers or those who refinanced and OWN ONLY ONE single family residence during the period of 2002 to present...
AND are still using that home as their principal residence, AND did not subsequently refi or extract equity a second time from said home.
The above criteria eliminates all multi unit (renter assisted) investors, and multi home speculators or serial flippers...
and those that extracted equity for speculative gain or living beyond their means.
The only exceptions should be:
a first time buyer and or person owning one single family primary residence,
(a) that can PROVE they had to refi their home, in order to pay escalating property taxes on their home OR
(b) (low or fixed income & seniors) where it could be CONSTRUED that the loan terms or conditions are exhorbitant, onerous, AND were materially misrepresented.
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