The politicians may have fled Washington for conventions and vacations, but there's been lots of action at the Federal Housing Administration that could affect home buyers and borrowers across the country.

Tops on the list: Forced by Congress to raise prices, FHA is increasing the mortgage premiums it charges applicants in its booming programs. Starting October 1st, upfront premiums will jump by one quarter of a percentage point -- from the current one and half percent of the loan amount to one and three quarters.

Annual premiums will remain in the half-point range. Home owners seeking refinancing under the expanded "FHASecure" program will be charged 3 points in premiums up front.

FHA had no choice but to raise premiums across the board following Congress's imposition of a one year moratorium on the agency's planned move to "risk based pricing" for all applicants, using credit scores and downpayment amounts.

Under those plans, people with high credit scores and downpayments would be charged lower insurance premiums. Borrowers with low scores and downpayments would be charged more - precisely as they are in the private mortgage insurance industry.

But Congress decided to keep the traditional "one-size-fits-all" cross-subsidization approach that FHA has used for decades, at least for another year.

Seller-paid downpayment gift assistance through third-party organizations such as Nehemiah and Ameridream -- which the agency says have contributed heavily to insurance claims -- will no longer be accepted by FHA as of October 1.

The net effect of the premium increase for most buyers: An extra $500 more in fees up front on a typical $200,000 mortgage.

At the same time, FHA announced a series consumer-friendly changes to the ways it handles loan modifications for borrowers in financial trouble. The bottom line is that when home owners fall behind and need to have their payment terms changed to enable them to stay in the house, fees will be tacked onto their principal debts and any rate hikes will be limited.

Finally, FHA's parent department -- HUD -- made good on its promise and sent its final version of real estate settlement and mortgage disclosure rules -- the so-called "RESPA reform" regulations - for final White House clearance. Though mortgage and real estate industry groups - along with 243 members of the House -- have criticized the rules as unwieldy and potentially costly to implement, HUD said consumers need better disclosures now, not later. The RESPA changes appear likely to be adopted before the next administration arrives in January -- tossing a political hot potato to either John McCain or Barack Obama.

Published: September 1, 2008

Use of this article without permission is a violation of federal copyright laws.

Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.