This was a vote on an amendment by Sens. Robert Menendez (D-NJ) and Johnny Isakson (R-GA) that would increase the amount that the Federal Housing Administration (FHA) can insure on a home mortgage from $625,000 to $730,000. This amendment was offered to legislation that would provide annual funding in fiscal year 2012 for Agriculture, Transportation, and Commerce department programs.
In response to the housing crisis (which at the center of a larger financial crisis in 2008), the FHA had been authorized to insure up to $730,000 on home mortgages. Previously, the limit had been set at $625,000. The increased FHA limit had expired on September 30, and been lowered back to $625,000 (the pre-financial crisis limit). Menendez and Isakson’s amendment would have increased the FHA mortgage insurance limit once again to $730,000.
Menendez urged support for his amendment: “The Menendez-Isakson amendment would temporarily restore conforming loan limits to the level that existed under the law as of September 30 but expired. The drop in loan limits has reduced consumer credit in 669 counties across 42 States. The amendment as we have drafted it will save taxpayers $11 million over 10 years, including $2 million in fiscal year 2012, according to the CBO, by creating a premium that borrowers have to pay as a result of getting the loan, therefore putting the risk on the borrower, not the taxpayer. If we want to get our economy moving, the housing market has to be part of it.”
Sen. Richard Shelby (R-AL) opposed the Menendez-Isakson amendment: “I urge my colleagues to vote against the Menendez amendment. If this amendment becomes law, taxpayers will be forced to subsidize individuals who make upward of $200,000 a year so they may buy homes worth nearly $1 million. That is what this is about. Increasing the loan limits will only benefit those who do not need federal subsidies. This is simply not a good use of scarce taxpayer dollars. Even the administration does not support higher loan limits here. It is a bad amendment.”
The Senate agreed to this amendment by a vote of 60-38. All 52 Democrats present and 8 Republicans voted “yea.” 38 Republicans voted “nay.” As a result, the Senate agreed to an amendment that would increase the amount that the Federal Housing Administration can insure on a home mortgage from $625,000 to $730,000
. In order for this amendment to become law, however, it would have to pass the House of Representatives and be signed into law by the president. When this vote occurred, the House had not yet voted on this amendment.