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No More FHA Cure?

Seeking FHA approval for new development, particularly in nabes like Williamsburg and Long Island City, has become old hat for developers as lending guidelines have gotten tighter. But the usefulness of FHA-backed mortgages, which currently allow down payments as low as 3.5%, might change if Congress moves forward with a proposal to raise FHA down payment minimums to 5%,. The FHA says new FHA-backed loans could decrease by as much as 40%. Given how much developers are touting that FHA cred, how much could this mess with sales at new buildings? [WSJ]