|FOR IMMEDIATE RELEASE:||
CONTACT: Jesse Jacobs - 202-224-4524
|Thursday, April 25, 2002||
Craig Davis - 202-224-7391
Senator Paul S. Sarbanes (D-MD), Chairman of the Banking, Housing, and Urban Affairs Committee, joined by 9 of his colleagues, have introduced legislation that would permanently codify the Federal Housing Administrations' (FHA) streamlined home downpayment process that has been instrumental in helping millions of Americans realize the dream of homeownership.
Currently, FHA loans account for about 20% of the housing mortgage market. However, FHA loans are even more important for first-time homebuyers, buyers with lower incomes, and minority homebuyers, many of whom have not been well served by the traditional mortgage marketplace.
The bi-partisan "FHA Downpayment Simplification Act of 2002" would permanently reauthorize legislation that is set to expire at the end of this year. Without Congressional action, the law will expire and result in higher costs for Americans seeking the benefits of homeownership.
"The role played by FHA in spreading the benefits of homeownership to a broader range of Americans is one of the key reasons why my colleagues and I believe it is important to renew and make permanent the law authorizing the streamlined downpayment calculation for all FHA single family insured loans," said Sarbanes.
The streamlined downpayment process, as its name implies, is relatively simple and straightforward. The buyer puts down at least 3% of the acquisition cost of the home. The acquisition cost includes both the sales price and the closing costs. The old system required different downpayment rates for each portion of a mortgage. This approach required a complex, multi-step calculation that often confused consumers, realtors, and lenders alike, and resulted in higher overall closing costs for the consumer.
Joining Sarbanes in introducing the legislation, S. 2239, were: Senators Wayne Allard (R-CO), Jim Bunning (R-KY), Tom Carper (D-DE), Hillary Rodham Clinton (D-NY), Jon Corzine (D-NJ), John Ensign (R-NV), Robert Torricelli (D-NJ), Rick Santorum (R-PA), and Charles Schumer (D-NY).