Funds Gone, FHA Stops Making Loans
The Federal Housing Administration today told lenders to stop taking applications for government-insured home mortgages because the agency has reached its $57.4-billion credit ceiling.
“The game’s over, we’re out of business,” Silvio Bartolomeis, the FHA’s acting administrator said. “This means that the public will have to rely on the private sector” until Congress enacts legislation extending the credit ceiling.
One analyst said the action would force conventional and Veterans Administration loan rates somewhat higher.
Mortgages issued by FHA and VA account for 15% to 20% of the overall mortgage market.
FHA’s regional offices and large lenders were told in telegrams today to stop processing new mortgage applications after the close of business at the end of the day, Bartolomeis said.
sh Falling Rates
Falling interest rates, which spurred a boom in home sales and a rush to refinance high-rate mortgages at lower rates, caused the unusual exhaustion of FHA’s credit authority.
Bartolomeis said the agency will insure any mortgages that have already been committed to prospective home buyers, but no new applications will be accepted.
Legislation to extend FHA’s credit authority has passed the House and a similar version was expected to be taken up today in the Senate. But enactment could take several days because the Senate bill would have to go back to the House for final action.