Most Americans Think FHA Can Help Solve Subprime Woes.

WASHINGTON -- Department of Housing and Urban Development secretary Alphonso Jackson quoted new survey findings to emphasize "the urgent need for Congress to pass legislation that modernizes the FHA to help both promote and protect homeownership."

Released by Wells Fargo, the survey shows nearly 80% of Americans support legislation that would promote and protect homeownership "by providing a safer, fairer and more affordable mortgage alternative to high-cost subprime loans," HUD said.

Addressing a Wells Fargo Housing Symposium here, Mr. Jackson said the survey highlights the need for a modernized Federal Housing Administration, which would help hundreds of thousands of borrowers find an exit strategy from the trap of exotic subprime mortgage loans. "Americans are in support of an FHA that could help even more first-time homebuyers and people with moderate incomes have access to safer mortgages," he said.

The survey also found that 79% of Americans from the Northeast and 75% in the West, where real estate costs are the highest in the nation, favored the FHA modernization legislation. HUD noted few borrowers in New York or California can obtain an FHA-insured mortgage loan because FHA loan limits do not provide sufficient funds for the cost of most homes in these states and the Expanding American Homeownership Act of 2007 would raise FHA loan limits to make homeownership affordable to buyers in these high-cost areas.

The current subprime market crisis shows that "many traditional FHA borrowers, with less-than-perfect credit and little money for a downpayment, have turned to high-cost, risky loan products, especially subprime loans, because FHA's loan limits are too low and the downpayment requirement is too stringent," HUD noted. Especially low-income, minority and first-time homebuyers need "financially sound options," Mr. Jackson said, further noting that the housing market is making a needed correction.

Currently, homeownership stands at historic levels of nearly 70% of all American families. The goal, Mr. Jackson said, is to continue to ...