The credit crisis is severely contracting the amount of money available for mortgages. Homeowners facing foreclosure are unable to sell their homes prior to actual foreclosure because of a lack of buyers with financing. The bill...

The credit crisis is severely contracting the amount of money available for mortgages. Homeowners facing foreclosure are unable to sell their homes prior to actual foreclosure because of a lack of buyers with financing. The bill, entitled the Expanding Homeownership Act of 2007 (S. 2325) passed the House on September 18, 2007.

The bill is now in the Senate where it is sponsored by Senator George Voinovich (R-OH) . The legislation provides more FHA financing to homeowners facing foreclosure or mortgages with resetting interest rates (S. 2325).

The bill:

*Increases FHA loan limits. The FHA loan limit in high cost areas is 87% of the GSE (Government Sponsored Enterprise) conforming loan limit. That will be raised to 100% by this legislation. In lower cost area the percentage will be raised from the current 48% to 65%. These changes, in effect, raise the FHA loan limit to 125% of a housing market's median home price, up to $729,750. Currently the FHA limits are too low -- to the point where no FHA loans are available in many parts of the country. In California, the FHA only insured about 5000 mortages in 2005.

*Eliminates the current statutory 3 percent minimum down payment requirement --the FHA will be able, in some cases to insure zero-down mortgages;

*Ties FHA insurance premiums to the credit profile of borrowers. Low-risk borrowers will pay lower FHA premiums.

*Increases the mortgage term from 35 to 40 years.