The FHA Modernization Act of 2007, passed last week by the U.S. Senate, aims to help protect the interest of America’s current and future homeowners by providing an important and safer financing option to riskier mortgage products which is believed to be safer.

It is also seen to provide assistance to homeowners who may be facing foreclosure, according to the National Association of Realtors.

The FHA has been able to help over 33 million families become homeowners since that time, but now it needs to be able to adapt to today's marketplace. With the passing of the FHA Modernization Act of 2007, more families will be helped. This new, modern-era FHA would provide many hard-working Americans a variety of homeownership options that are safer and at a fair price.

NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, California said “A reformed FHA is positioned to help homeowners who face unaffordable mortgage payments as a result of resetting adjustable subprime loans and help bring stability to local markets and economies.”

“NAR commends the leadership of Majority Leader Harry Reid, D-Nev.; Senate Banking Chairman Christopher Dodd, D-Conn.; and Sens. Mel Martinez, R-Fla., and Richard Shelby, R-Ala., for passing the Federal Housing Administration reform bill, S. 2338, today” Gaylord added.

The FHA modernization was well supported by the NAR as this would increase loan limits, reduce or eliminate the statutory 3 percent minimum cash down payment, and give FHA increased flexibility and the ability to streamline certain programs. It also aims to strengthen the loss mitigation program.

“FHA can once again be a leader in providing safe loan products and preventing foreclosures by authorizing lenders to help borrowers who are in default. That assistance will make a substantial difference for many families that may otherwise face foreclosure,” Gaylord said.

In addition, the increase in FHA mortgage loan limits would help first-time home buyers, minority buyers, and people who do not qualify for conventional mortgages. Increased loan limits would also help people living in high-cost areas; current FHA limits make the program unusable in these areas,” said Gaylord.

Gaylord noted that FHA has made mortgage insurance widely available to individuals regardless of race, ethnicity or social status during periods of prosperity and economic depression. The FHA program makes it possible for higher risk yet creditworthy borrowers to obtain prime financing.