FHA: Remove 3% minimum downpayment?

http://rockland.villagesoup.com/Business/story.cfm?storyID=91230

If this goes through there may be a small boost in below median priced houses for sale:

KNOX COUNTY (April 23): In testimony Thursday before a U.S. House Financial Services Subcommittee, the NATIONAL ASSOCIATION OF REALTORS® stressed the need for the Federal Housing Administration to make changes that satisfy today’s consumer demands.

Among those changes: The FHA should provide borrowers with a safer alternative to riskier mortgage products that are on the market today, NAR says. The association also supports legislation that would boost loan limits, eliminate the 3 percent minimum cash down payment, and give the FHA flexibility to provide risk-based pricing.

“As subprime loans reset and real estate markets have cooled, a reformed FHA would be perfectly positioned to offer borrowers a safer mortgage alternative and help bring stability to local markets and local economies,” said Iona Harrison, a REALTOR® from Maryland who spoke on behalf of NAR.

New Century Files for Bankruptcy

This has been looming for a while... while most are not surprised, I still consider it big news:

New Century Financial Corp., once a highflying home lender, filed for
bankruptcy-court protection Monday as expected, becoming the biggest casualty from the cratering of the U.S. market for high-risk residential mortgages. In its Chapter 11 filing in Delaware bankruptcy court, the Irvine, Calif., lender listed over $100 million in assets and more than $100 million in debts. Numbers were vague because the official bankruptcy form only had boxes to check off that had a range of values. "More than $100 million" is the largest value range given.

In connection with the Chapter 11 filing, New Century said it will reduce its work force by about 3,200, or 54%, to cut costs and resize certain businesses in preparation for a possible sale, effective immediately.