WASHINGTON, DC — According to the National Association of Home Builders (NAHB), significant housing legislation that will promote housing affordability and expand rental housing and homeownership opportunities was passed when the House of Representatives voted in favor of S. 2239, the "FHA Downpayment Simplification Act of 2002," during a special lame-duck session of Congress.

"This legislation is one of the top priorities of the National Association of Home Builders, and we worked tirelessly with leaders of both chambers of Congress in order to forge a bipartisan consensus to move this vital housing bill forward," said NAHB president Gary Garczynski.

The Senate passed S. 2239 last month before adjourning for the November elections. The bill is expected to be signed into law shortly by President Bush.

The legislation includes several provisions designed to enhance housing affordability, including indexing FHA multifamily loan limits to inflation, permanently extending the FHA down payment simplification process, and repealing a scheduled increase in the Ginnie Mae guaranty fee that would have raised the cost of housing for thousands of families using FHA insurance and VA guaranty programs.

"The indexing mechanism approved by Congress ensures that FHA multifamily loan limits will not again lag behind and impede the use of the FHA multifamily programs," said Garczynski. "Indexing the loan limits to inflation gives builders and lenders confidence that they will be able to use the programs in their communities every year, even as construction and land costs rise over time."

The bill is said to further enhance housing affordability by permanently extending the single-family down payment simplification process, continuing to make it easier for low- and moderate-income families to obtain the necessary financing to purchase a home.

"The simplified formula reduces up-front cash requirements for many prospective home buyers, a major factor for those on the brink of affordability," Garczynski said. "NAHB believes this legislation will substantially reduce the down payment burden for more than a quarter of a million households every year. This will enable thousands of families who otherwise could not qualify for a mortgage to achieve the American dream of homeownership."

Publication date: 11/18/2002