For starters, consumers will have a wider choice of FHA loans than they do today. This is the kind of product consumers want and HUD needs to be in the business of providing consumers with what they want. A temporary fix that effectively lowered the FHA down payment requirement will be made permanent with the legislation, too. The government used to calculate how much a person needed to pay at closing using a complex tiered formula, which usually resulted in the borrower fronting more cash. HUD adopted a simplified procedure a few years ago, but its ability to continue using it will expire soon without H.R. 1776.
Civil servants gain, too Civil servants stand to gain from the new bill as well.
Under one of its sections, teachers, police officers, firefighters and others will be permitted to get FHA mortgages for just 1 percent down instead of the typical 3 percent. They'll also be able to defer the 2.25 percent fee the government usually collects at closing to bolster the insurance fund that makes FHA lending possible. This is the kind of product consumers want and HUD needs to be in the business of providing consumers with what they want. Instead of having to pay another full insurance premium when moving from one HECM to another, they'll only have to pay a nominal amount. People who want to replace windows, add a garage or perform other non-luxury home improvements will find they can get more money, too.