HUD Homes / VA Homes News

The Department of Housing and Urban Development (HUD) last week warned Congress that the Federal Housing Administration (FHA) could face financial difficulties if legislators limit its ability to charge higher premiums to riskier borrowers.

A letter, addressed to House Financial Services Chairman Barney Frank, D-Mass., and Senate Banking Committee Chairman Christopher Dodd, D-Conn., said that "FHA will move ever closer toward financial insolvency, given the uncertainty and volatility in today's mortgage market if forced to continue its current premium structure."

The letter was written by HUD Secretary Alphonso Jackson.

Currently, the Bush administration opposes FHA-reform provisions that would limit their ability to charge borrowers fees above a certain amount.

Proponents of the legislation, such as Rep. Frank, have stated that the limitations will make FHA loans available to more borrowers who might otherwise be excluded by higher fees or larger down payment requirements.

Homeowners facing foreclosure or worried about a big rise in their monthly payment when their "teaser rates" expire should look at refinancing with a Federal Housing Administration (FHA) loan.

U.S. Housing and Urban Development Secretary Alphonso Jackson said FHASecure loans have given thousands of homeowners a stable landing place with a fixed-rate mortgage.

Guidelines for Federal Housing Administration Loans:

To qualify, homeowners must meet the five following criteria. For housing counseling, call (888) 995-HOPE.

- A history of on-time mortgage payments before teaser rates expired and reset.

- Interest rate must reset between June 2005 and July 2009.

- Three percent cash or equity in home.

- Sustained employment history.

- Enough income to make FHASecure payments.