House Committee Acts on Bill to Protect FHA Fund

A sub-committee of the House Financial Servicesrncommittee today approved the FHA Emergency Solvency Act which is intended tornshore up the finances of the Federal Housing Administration (FHA).  The legislation strengthens FHA’s Mortgage InsurancernFund by establishing minimum annual premiums for mortgage insurance; barringrnunscrupulous lenders from participating in the program, improving the FHA’srninternal financial controls, transparency, and disclosure requirements, andrnrequires lenders who commit fraud to repay any losses suffered by FHA as arnconsequence. </p

FHA’s cash reserves have been hard-hitrnby the housing crash and have fallen below 2 percent Congress has mandated itrnmust maintain.  According to thernsubcommittee’s press release, the agency’s finances have deteriorated to thernpoint where a bailout might be required in 2012 if the housing market worsensrnfurther.   </p

 “The FHA’s cash reserves are down to dangerousrnlevels, and taxpayers cannot afford another Fannie- and Freddie-style bailout,”rnsaid Rep. Biggert.  “This Administration needs to enforce strongerrnstandards and create room for the private sector to replace taxpayers as thernprimary source of funding.  The FHA is facing an urgent fiscal crisis, andrnthis proposal gives HUD Secretary Donovan emergency tools to wind down the riskrnbefore it’s too late.”<br /<br /Also on Tuesday the Subcommittee approved the Affordable Housing and Self-Sufficiency Improvement Act, whichrnis intended to expand opportunities for low-income families that receivernhousing assistance to achieve self-sufficiency and reduces the costs of HUD’srnaffordable housing programs and thernHomeless Children and Youth Act, which harmonizes HUD’s definition ofrnhomeless children with that of other agencies like the Department of Education,rnallowing HUD to more accurately estimate the number of homeless in the U.S.</p

All three measures were passed byrnvoice vote.

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