homeowners insurance nj rates


Garrett Bill Aims to Protect Taxpayers from Another Bailout Projected FHA Loan Default Rate at 20% Rep. Scott Garretts (R-NJ) legislation to require borrowers under Federal Housing Administration (FHA)-insured mortgages to make down payments of at least 5% continues to make news, especially as new statistics emerge about FHA loan default rates. Garretts bill, the FHA Taxpayer Protection Act of 2009 is aimed at shielding taxpayers from the risk that the FHA portfolio presents. In addition to the 5% down payment requirement, an increase from the current required rate of 3.5%, Garretts legislation would also prohibit financing of closing costs under such mortgages, and require a Government Accountability Office (GAO) study of FHA fiscal soundness. In the Housing and Economic Recovery Act (HERA), Congress set the FHA down payment requirement at 3.5% and allowed closing costs to be included as part of that number. This effectively allowed FHA down payment levels to be as low as 2.5%. Homeownership is a noble goal, Garrett said. However, the benefits of promoting homeownership using government subsidies must be balanced against the potential risk of insuring less creditworthy borrowers and exposing the American taxpayer to that risk. As we have learned repeatedly throughout the mortgage crisis, the amount of equity a homeowner has in their home directly correlates to the credit risk associated to their mortgage. In trying to find a reasonable balance between the current …