Legislation passed in the state Legislature earlier this week will ensure the continued availability of FHA-insured mortgage loans in New York, said the bill’s sponsor, Assembly Majority Leader Joseph D. Morelle, D-Irondequoit.
Policy changes made by the Federal Housing Administration in 2013 inadvertently created a situation where a significant number of FHA-insured mortgage loans would exceed the subprime threshold established in state law in 2008. This raised significant concerns about the ability of potential homeowners to use this federal program, since lenders and secondary market participants have been reluctant to make any loans designated as “subprime,” given the potential financial and reputational risk of such loans.
This legislation adjusts the subprime threshold rate in order to help maintain the availability of FHA-insured mortgage loans, which have been especially helpful to first-time homebuyers and low-to-moderate income homebuyers, Morelle said.
The bill now goes to Gov. Andrew Cuomo for his signature.