WASHINGTON, DC - In an effort to help more struggling homeowners avoid foreclosure, the U.S. Senate today passed legislation improving the ability of the Federal Housing Administration (FHA) to insure mortgages for troubled borrowers. The Federal Housing Administration Modernization Act, which passed by a vote of 93-1, will increase FHA loan limits and reduce the agency's down payment requirements to allow more families to qualify for these secure loans. It also contains several key provisions authored by U.S. Senator Jack Reed (D-RI) to expand counseling services to help more families stay in their homes.

"The Federal Housing Administration Modernization Act will extend the benefits of FHA insurance to a larger number of families by raising loan limits and simplifying down payment requirements," said Reed, a member of the Banking Committee who worked closely with committee chairman Chris Dodd (D-CT) in crafting the legislation.

"I am particularly pleased that the bill includes my amendment to improve the HUD Post-Purchase Housing Counseling Program. This amendment expands access to HUD-approved counseling programs by allowing any low- or moderate-income homeowner to be eligible for financial counseling services," continued Reed. "Since we know that millions of homeowners are facing resets of their mortgages during the upcoming year, this change, combined with the new funding that the budget is expected to provide for housing counseling, could make a major difference now. This amendment will allow many more families to get the advice or assistance they need to help keep their home."

Additionally, the bill includes Reed's amendment to use $25 million in excess FHA funds every year for the purpose of improving FHA's technology, processes, and program performance, and for providing appropriate staffing for the FHA mortgage insurance programs.

"This investment is critical to ensuring the success of our FHA modernization proposal since it will allow FHA to access cutting-edge mortgage insurance industry practices and procedures," noted Reed.

The bill also includes a proposal Reed worked on with Senator Wayne Allard (R-CO) to allow the Home Equity Conversion Mortgages (HECM), a successful and important FHA program for seniors, to expand.

"I am pleased that so many of my Republican colleagues joined me in supporting this critical legislation. This bill will not end the current housing slump, but it offers real hope and resources to about 200,000 families who have fallen behind on their mortgage payments. When the FHA gets in the act with higher loan limits, streamlined procedures, lower down payments, more reasonable and affordable mortgage interest rates, that means more people, I think, can not only buy a home, but stay in their home," concluded Reed.