Affordable Homes — Still Key Part of Obama’s Mortgage Reform Plan

Published by nora | Filed under Buyer / Seller Tips, Miscellaneous, Mortgage / Finance, Real Estate

Opportunities for families to buy affordable homes or rent affordable rental housing are still among the top goals of President Barack Obama’s mortgage reform plan. The Obama administration wants to correct the flaws of the mortgage market in order to:

• strengthen consumer protection
• increase transparency for mortgage investors
• improve mortgage underwriting standards
• support the provision of sustainable mortgage products
• step up the availability of affordable housing options

In order to achieve the above goals, the Obama reform plan will do the following:

1.  Wind down the government-sponsored enterprises Fannie Mae and Freddie Mac
The administration believes that the U.S. government needs to reduce its financial participation in the housing market. It should be the private sector that’s providing the primary support for mortgage loans and that’s bearing the burden of mortgage losses. The current situation wherein about 90 percent of new mortgages are guaranteed by the government is not an ideal situation for the nation.

2.  Increase down payments to at least 10 percent for loans guaranteed by Fannie Mae and Freddie Mac.
This gradual increase will be implemented as these two GSEs are being winded down.

3.  Return the Federal Housing Administration to its original role.
The FHA needs to regulate the housing market in a way that the private sector leads the way in providing mortgages. The mortgage market share that Fannie Mae and Freddie Mac will ultimately lose as the two GSEs gradually decline in guarantee activities should be picked up by private lenders.

4.  Require Fannie and Freddie to price their mortgage guarantees in ways that the competition between them and private lenders are on a level playing field.

5.  Reduce Fannie and Freddie conforming loan limits.
Congress is being asked to reset the increase in conforming loan limits to levels described in the Housing and Economic Recovery Act.

6.  Strengthen the FHA.
The FHA will continue to ensure that affordable homes are available to responsible borrowers, but it will also ensure that it will survive without depending on the Treasury for support. Specific strategies are the reduction of loan-to-value ratios and the adjustment of mortgage pricing.

7.  Ensure that home loans are available to all prospective home buyers who have good credit.
Mortgage securities providers will be checked to ensure that they’re providing capital to all communities, including low-income neighborhoods, rural areas and economically distressed regions.

All of the above are geared towards providing stability to the U.S. mortgage market. With a stable mortgage market, more people can buy affordable homes. In Tampa, affordable homes for sale can be found with the help of Tampa4U.com.