FHA Reform Act Passes House Financial Services Committee

The House Financial Services Committee approved the FHA Reform Act of 2010 (H.R. 5072) to ensure that the Federal Housing Administration (FHA) remains viable and continues its mission of insuring mortgage loans.

Congresswoman Maxine Waters (D-CA), Chairwoman of the Housing and Community Opportunity Subcommittee, said yesterday she drafted the bill in response to recent events that caused FHA’s reserves to fall below the two percent level required in law.

According to a statement from the committee, the Act will empower FHA to improve its financial position by allowing the agency to adjust its premium structure for new borrowers, while still providing affordable mortgage insurance to the individuals FHA is intended to serve including low-income and minority borrowers and individuals in traditionally underserved areas

Advertisement

“The economic crisis that started a couple of years ago and declining home prices have caused FHA’s capital reserves to deteriorate in recent months, but under the leadership of Secretary Shaun Donovan and FHA Commissioner David Stevens, FHA has taken unprecedented administrative and regulatory steps to improve risk management and root out bad actors participating in the program,” Congresswoman Waters said. “This legislation makes essential reforms to strengthen FHA’s finances.”

H.R. 5072 creates a new Deputy Assistant Secretary at FHA for Risk Management and Regulatory Affairs and provides the agency with enhanced authority to terminate lenders’ approval to originate or underwrite loans backed by FHA insurance when it finds evidence of fraud or noncompliance.

In addition, the bill requires FHA to improve its internal reporting systems to better manage risk and to provide transparent data to the public and to Congress. This includes improving monitoring of early defaults and claims, tracking mortgage information by loan servicer, and providing FHA with the ability to contract out for additional credit risk analysis.

While the bill doesn’t address FHA’s reverse mortgage program specifically, the Act should help to improve the oversight and data reporting elements of the HECM program.

The bill still needs approval by the full House and the senate before it’s signed into law. A Senate Version has not yet been introduced.

Join the Conversation (7)

see all

This is a professional community. Please use discretion when posting a comment.

  • Louise,rnrnThese are trying times. Three years ago, Peter Bell was encouraging all that with a Democratically controlled Congress and White House all would be well for the HECM program. I fully agreed with that assessment. It was common to hear in those heady days “vote with your pocket book.”rnrnToday, it is the Administration who quietly attacks this program, inflicting its deepest wounds to date through the budget process. It hides the home appreciation rate it uses in making HECM credit subsidy calculations. It has falled to disclose how large the subsidy must be for next year in order to prevent changes to the HECM program. This Administration has forced HUD and FHA to provide alternatives rather than provide transparency. This Administration has made a complete mockery of helping seniors and providing full disclosure in the HECM program.rnrnIt is disappointing to see the government turn against our elders. Yes, HECMs help a privileged class but the program was designed to have ups and downs. It is a shame that a Democratically controlled Congress created HERA with the MMI switch and then fails to support this wonderful program for seniors. Even some like Marty Bell have difficulty recognizing some legislators like Senator Clare McCaskill for the Democrats they are. O for the days of FDR and LBJ!!! They championed reasonable protections for seniors.

  • While I appreciate the need to get FHA back on an even keel and I applaud the efforts of Maxine Waters and her committee in working to provide low income and minority citizens with stable insured financing, I still wonder that the same Congress that bailed out GMAC, BofA, Goldman Sachs, etc., while lowering (oh excuse me, changing) the medicare benefits to seniors in the new health bill, considers balancing the books on the back of its most fragile constituents.

    Now, at a time when seniors, the most vulnerable victims of the Wall Street investment debacle, and I have a met many of them facing a significant decrease in their retirement plans as a result, need access to what is usually their largest asset, their home, reverse mortgage proceeds are shrinking to allow FHA to continue to operate in an improved financial position. Listen, I’m all for FHA operating in a financially sound way; I just wish Congress would look at the private sector with half the jaundiced eye they present to one of the biggest and most consistent voting blocks in the US, its seniors.

    When seniors ask me why they can’t get the same amount of proceeds they could have gotten a year ago, I tell them the truth. FHA couldn’t get the funds from Congress, even though the President requested the funds from Congress. And, because Congress enacted legislation in 2008 which mandates a change in how accounting is done for reverse mortgages, each year will see a possible change (so far downward) in the amount of proceeds a reverse mortgage can offer the senior borrower.

    I let the senior borrowers draw their own conclusions about the implications of the same Congress that limits the funds they can receive from a reverse mortgage bailing out the companies that affect their pensions and retirement plans. The majority are very, very quick to make the connecton.

  • While I appreciate the need to get FHA back on an even keel and I applaud the efforts of Maxine Waters and her committee in working to provide low income and minority citizens with stable insured financing, I still wonder that the same Congress that bailed out GMAC, BofA, Goldman Sachs, etc., while lowering (oh excuse me, changing) the medicare benefits to seniors in the new health bill, considers balancing the books on the back of its most fragile constituents.

    Now, at a time when seniors, the most vulnerable victims of the Wall Street investment debacle, and I have a met many of them facing a significant decrease in their retirement plans as a result, need access to what is usually their largest asset, their home, reverse mortgage proceeds are shrinking to allow FHA to continue to operate in an improved financial position. Listen, I'm all for FHA operating in a financially sound way; I just wish Congress would look at the private sector with half the jaundiced eye they present to one of the biggest and most consistent voting blocks in the US, its seniors.

    When seniors ask me why they can't get the same amount of proceeds they could have gotten a year ago, I tell them the truth. FHA couldn't get the funds from Congress, even though the President requested the funds from Congress. And, because Congress enacted legislation in 2008 which mandates a change in how accounting is done for reverse mortgages, each year will see a possible change (so far downward) in the amount of proceeds a reverse mortgage can offer the senior borrower.

    I let the senior borrowers draw their own conclusions about the implications of the same Congress that limits the funds they can receive from a reverse mortgage bailing out the companies that affect their pensions and retirement plans. The majority are very, very quick to make the connecton.

    • Louise,

      These are trying times. Three years ago, Peter Bell was encouraging all that with a Democratically controlled Congress and White House all would be well for the HECM program. I fully agreed with that assessment. It was common to hear in those heady days “vote with your pocket book.”

      Today, it is the Administration who quietly attacks this program, inflicting its deepest wounds to date through the budget process. It hides the home appreciation rate it uses in making HECM credit subsidy calculations. It has falled to disclose how large the subsidy must be for next year in order to prevent changes to the HECM program. This Administration has forced HUD and FHA to provide alternatives rather than provide transparency. This Administration has made a complete mockery of helping seniors and providing full disclosure in the HECM program.

      It is disappointing to see the government turn against our elders. Yes, HECMs help a privileged class but the program was designed to have ups and downs. It is a shame that a Democratically controlled Congress created HERA with the MMI switch and then fails to support this wonderful program for seniors. Even some like Marty Bell have difficulty recognizing some legislators like Senator Clare McCaskill for the Democrats they are. O for the days of FDR and LBJ!!! They championed reasonable protections for seniors.

  • Louise,rnrnThese are trying times. Three years ago, Peter Bell was encouraging all that with a Democratically controlled Congress and White House all would be well for the HECM program. I fully agreed with that assessment. It was common to hear in those heady days “vote with your pocket book.”rnrnToday, it is the Administration who quietly attacks this program, inflicting its deepest wounds to date through the budget process. It hides the home appreciation rate it uses in making HECM credit subsidy calculations. It has falled to disclose how large the subsidy must be for next year in order to prevent changes to the HECM program. This Administration has forced HUD and FHA to provide alternatives rather than provide transparency. This Administration has made a complete mockery of helping seniors and providing full disclosure in the HECM program.rnrnIt is disappointing to see the government turn against our elders. Yes, HECMs help a privileged class but the program was designed to have ups and downs. It is a shame that a Democratically controlled Congress created HERA with the MMI switch and then fails to support this wonderful program for seniors. Even some like Marty Bell have difficulty recognizing some legislators like Senator Clare McCaskill for the Democrats they are. O for the days of FDR and LBJ!!! They championed reasonable protections for seniors.

string(101) "https://reversemortgagedaily.com/2010/04/28/fha-reform-act-passes-house-financial-services-committee/"

Share your opinion