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THE CRANSTON-GONZALEZ National Affordable Housing Act, passed during the 101st Congress' final days and signed by President Bush, has been called a turning point in U.S. housing policy.

On signing day, the president said: "The National Affordable Housing Act gives people the best kind of government assistance -- it provides opportunity and encourages responsibility without the shackles of dependency."

Forget the rhetoric; the question is which way is housing turning?

Granted, there are some very important provisions in the act, among them helping the poor become homeowners, addressing housing for the elderly and insuring borrowers who receive low loan amounts are not paying the highest charges.

The rare home equity conversion program, also known as the reverse mortgage, which allows those who own or are close to burning the mortgage to benefit from all that pent-up equity, is being expanded by a factor of 10.

And all buyers and owners, even "middle-class" types, will be protected when it comes to the transfer of mortgage servicing rights between financial institutions, a pet concern of Rep. John J. LaFalce, D-Town of Tonawanda.

But lenders point to the bill's provisions regarding Federal Housing Administration reform, which dull the legislation's overall luster.

Critics charge the good ol' first-time buyer, who until now has had trouble scraping together enough to make a down payment and handle the monthly mortgage, was again kicked in the gut -- and this time may not get up. Estimates are that as many as 100,000 potential buyers will be prevented from buying due to FHA alterations.

Some industry watchers think the big push to tighten policy and bring fiscal stability to the FHA may backfire, as the healthiest borrowers opt out ofthe program for conventional financing.

"The housing trust (a government loan buy-down program that will allow low-income mortgage rates as low as 6 percent) and the HOME partnership (a new grant program to fund affordable housing designed by local and state governments) are good programs," said Brian Chappelle, staff vice president for the Mortgage Bankers Association. "But to us, the FHA changes are the bill -- they are 85 percent of our concern."

The idea behind adjusting the FHA regulations was to shore up a shaky situation. A Price Waterhouse review of FHA financials indicated that the mortgage guarantee system was in serious financial straits, and that immediate action was necessary to avoid collapse. Read that as another taxpayer bailout, a la the savings and loan debacle.

The administration and the Senate, perhaps trying to make up for the miscues thus far experienced with the RTC, FSLIC, FDIC and other thrift industry-related acronyms, came out tough on the FHA buyer. The idea was to increase up-front cash payments -- two-thirds of closing costs would have to be paid at closing -- plus concentrate new monthly premium increases on people with the shakiest potential for repaying their mortgage. Makes sense, doesn't it?: You have a hard time making the grade, so pay more.

The House wanted to charge people using FHA-insured loans a bit more to help bolster the FHA mortgage insurance fund. In the end, a compromise was worked out, which leans toward the administration-Senate stance.

The up-front mortgage insurance premium continues to be financeable, but a 0.5 percent annual renewal premium of the remaining loan balance has been added to the equation, which adds an additional $32 per month to the mortgage payment on a $75,000 home.

A caveat: The 3.8 percent upfront premium is for Fiscal Years 1991 and '92, and how long the 0.5 percent annual premium lasts, depends on the loan-to-value ratio -- how much money you're putting down. The premium lasts for five years if the loan is less than 90 percent of the home price, eight years for loan-to-value of 90 percent up to and including 95 percent, and 10 years for a loan above 95 percent of home value.

For FY '93 and '94, the up-front premium drops to 3 percent, but the renewal time frame lengthens, as is the case in FY '95 and beyond, when the up-front premium drops to 2.25 percent, but the annual premium terms lengthen to 11 years, 30 years and 30 years for the three loan-to-value ratios.

If you are lost in the explanation, just remember this: the less money you put down, the more it will cost annually.

"The risk-based premium places more expense on those people who can least afford it," said Greg Samp, executive vice president of Rochester-based Sibley Mortgage Corp., one of the area's largest FHA lenders.

The Mortgage Bankers' Chappelle contends the increased premium will drive the FHA's best customers from the program, causing the agency to fall short of its revenue goals by as much as $1 billion.

"The FHA is becoming the lender of last resort," Chappelle said.

Hold on, there's more. As monthly payments increase, in many instances, so, too, will the total amount of money needed for a down payment. Previously, buyers could roll 100 percent of closing costs into the mortgage amount; now that's dropped to 57 percent.

To find out how much more a borrower may be liable for up front, you must find the maximum mortgage allowed. This involves determining the maximum mortgage pre-reform, determining the maximum mortgage post-reform and using the lesser figure. Whether closing costs increase depends on the amount of those charges paid by the borrower.

"This change will have more of an effect in New York because we have higher closing costs," Sibley's Samp said.

While the bill has been signed into law, its implementation remains a relative mystery. Right now, increased down payments are slated to kick in next month; increased mortgage insurance premiums begin in March.

But this being the U.S. Congress, nothing time-wise is cast in stone, and the major industry groups, which see FHA reform as anathema, are prepared to return to Capitol Hill for additional arm twisting.

"We will lobby to change the FHA reforms," said Stephen Driesler, senior vice president of government affairs for the National Association of Realtors. "But we want to see how HUD implements the changes and how the market reacts to them."

Driesler said the best time to approach Congress may be December 1991, when the reforms have had a year to ferment and the FHA's financial picture is clearer.

And perhaps by then potential buyers may be mad enough to demand reforming the reforms.

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