By Robert Freedman, REALTOR® Magazine

Realtors® are asking Congress to strengthen the Federal Housing Administration, extend the FHA’s high-cost loan limits, and get flood and disaster insurance reforms passed as part of their push on Capitol Hill this week during the association’s annual legislative conference. 

Legislation to strengthen the FHA would allow the agency to increase its annual mortgage insurance premium, which borrowers can fold into the loan amount.

FHA Commissioner David Stevens has said that once the agency has that authority, it’ll be able to reduce its upfront mortgage insurance premium, which it raised several months ago to meet congressionally mandated reserve requirements. The upfront premium raises closing costs because it has to be paid in full at closing.

NAR is also seeking to make the FHA’s high-cost loan limits permanent. The limits, now at $729,750, expire in the fall. If the limits aren’t extended, they would drop to about $417,000, too low to make the FHA a viable financing option in many larger metropolitan areas like Boston, San Francisco, Washington, and New York.

Flood and disaster insurance

The reforms NAR is seeking of the national flood insurance and disaster insurance programs aim to strengthen private insurers’ role in handling most disasters, reserving federal involvement as a backstop.

Realtors® will be asking their members of Congress to pass the legislation in the House before Memorial Day. Then attention would turn to the Senate.

Preventing bad amendments

The big focus of Congress now is financial services reform. The bill is huge in scope but only a part of it directly concerns real estate. Realtors® have been successful in defeating an amendment that would have required all borrowers to put down a minimum 5% when financing a house.

Supporters of that amendment and another a defeated amendment that would have ended federal control of secondary mortgage market companies Fannie Mae and Freddie Mac in the near future, are expected to reintroduce those measure at different junctures of the legislative process.

Careful treatment of Fannie and Freddie

NAR’s position on Fannie Mae and Freddie Mac reform is that it must be taken up separately, next year, and must be undertaken carefully. Realtors® oppose ending federal control before a structure is in place to ensure the availability of mortgage financing in the market, in good times and bad, which is the role the two companies are playing today.