Act's intent is to provide more affordable housing

Every American family should be able to afford a decent home in a suitable environment.

That's the national goal, as expressed in a major new housing legislative bill -- the National Affordable Housing Act. It's the first really significant housing legislation in 10 years and opens the door to new and experimental affordable housing programs.


The legislation makes it possible for mortgage lenders, government units and non-profit organizations to join in establishing local affordable housing programs. The act makes $57 billion available over the next two years for qualified programs. The funding is subject to the congressional appropriations process.

Among other things, the law made some changes in the Federal Housing Administration single-family mortgage insurance program. For example, it permanently increases the FHA mortgage limit to $124,875.


Also, the law changes the maximum loan-to-value ratio to 98.75 percent for mortgage loans up to $50,000 -- and 97.75 percent for mortgages above that level. In other words, smaller down payments will be required from qualified buyers.

On the negative side, the law requires that at least 43 percent of closing costs be paid in cash.

Other key provisions of the new law include the establishment of a special trust fund, administered by the Department of Housing and Urban Development. This will help low- and moderate-income families buy their first home. It provides down payment and closing cost assistance and subsidies to reduce mortgage interest rates to 6 percent.

The law also provides funds for the Housing Opportunities for People Everywhere program. This will help low- and moderate-income tenants in subsidized housing to buy their units.