The Senate Banking Committee approved a bill last week that loosens regulations on the Federal Housing Authority (FHA).

The FHA insures loans for many buyers of residential real estate.

You don’t hear a lot about FHA here in Massachusetts, because of low dollar limits on the loans they will insure.

The new law would change that, according to the Wall Street Journal:

FHA-insured loans lost market share over the past decade as lenders found that subprime loans were more lucrative and easier to arrange. The bill would increase the maximum size of loans that can be insured by the FHA in high-cost areas, such as California.

Currently, the FHA can’t insure loans greater than $362,790, largely shutting it out of the market even for modest homes in some areas. The bill would raise that to the local median home price or $417,000, whichever is less.

The bill would also lower the minimum down payment to 1.5% of the appraised value of the property from 3%.

That sounds all wel … wait!!! What?

The bill would also lower the minimum down payment to 1.5% of the appraised value of the property from 3%.

No.

That’s a terrible idea.

Now, I’m not saying that how much money you have invested in your home is indicative of whether or not the bank ends up foreclosing on your loan (but maybe that’s true?), but I think it’s safe to say that people who have higher levels of equity in their homes are in a much better situation. If you have 5-10% equity in your home, and have to sell it due to a lost job or because you get sick, you have many more options than if you have 1.5% invested and the market tanks. You won’t be able to cover your agent’s commission, with that, much less be able to absorb any market loss.

Nice try, but Congress can, and should, do better.

More: House Passes a Bill Curbing Mortgage Brokers – By Alex Frangos, The Wall Street Journal

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Updated:  1st Q 2018

Author Profile

John Ford
John Ford
EXPERIENCE

Over the course of 20 years in the Boston downtown real estate market, John represented and sold numerous, condominiums, investment and development properties in Greater Boston and in the surrounding suburbs



In addition to representing Boston condo buyers and sellers, John is currently one of the most recognized Boston condo blog writers regarding Boston condominiums and residential real estate markets. John's insights and observations about the Boston condo market have been seen in a wide variety of the most established local & national media outlets including; Banker and Tradesman, Boston Magazine The Boston Globe, The Boston Herald and NewsWeek and Fortune magazine, among others.



HISTORY

For over 24 years, John Ford, of Ford Realty Inc., has been actively involved in the real estate industry. He started his career in commercial real estate with a national firm Spaulding & Slye and quickly realized that he had a passion for residential properties. In 1999, John entered the residential real estate market, and in 2000 John Started his own firm Ford Realty Inc. As a broker, his clients have come to love his fun, vivacious, and friendly attitude. He prides himself on bringing honesty and integrity to the entire home buying and selling process. In addition to helping buyers and sellers, he also works with rental clients. Whether you’re looking to purchase a new Boston condo or rent an apartment, you’ll quickly learn why John has a 97% closing rate.

AREAS COVERED

Back Bay

Beacon Hill

Charles River Park

Downtown/Midtown

North End

South End

Seaport District

South Boston

Waterfront

Brookline

Surrounding Communities of Boston
Contact
John Ford and his staff can be reached at 617-595-3712 or 617-720-5454. Please feel free to stop by John's Boston Beacon Hill office located at 137 Charles Street.




John Ford
Ford Realty Inc
137 Charles Street
Boston, Ma 02114

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