FHA Housing and Homeowner Retention Act

Federal Housing Administration's bill, H.R. 5830 named as FHA Housing and Homeowner Retention Act was passed by House Financial Services Committe of the House of Representatives recently. This Act will result in availability of around $300 billion for borrowers who are facing foreclosure in the form of federally insured mortgages.

According to this Act, Federal Housing Administration would guarantee a new mortgage for borrowers facing foreclosure if the present lender agrees to accept short payment as full repayment of the mortgage. The new mortgage can be for up to 90% LTV & should have terms that borrower can afford.

After taking the new mortgage if borrower refinances or sells the home, from profits made he will have to pay a declining % of any net proceeds which are related to house appreciation (from 100% in year 1 to 50% in years 4 & beyond) or an exit fee which is equal to 3% of the original amount of the mortgage, whichever is larger.

It is estimated that because of this new Act almost 1.5 million borrowers who are facing trouble with their present mortgage will be benefitted.

Barney Frank (D-MA), who is the Chairman of House Financial Services Committe, targetting mortgage loan servicers said -