After announcing premium increases to Federal Housing Administration loans yesterday, acting housing commissioner Carol Galante today defended the agency’s $44.8 billion budget request for Fiscal Year 2013. Galante fielded questions regarding the budget and stressed the need to repair FHA’s Mutual Mortgage Insurance fund, which insures all FHA loans including its reverse mortgage portfolio.
The fund, which upon last review held just 0.24% in capital reserves, falling well short of the mandated 2% level, is slated to receive nearly a $1 billion windfall upon the historic Robo-signing mortgage settlement, as well as additional funds due to the premium increases scheduled to go into effect in April.
Before a House Financial Services Committee hearing Tuesday, Galante assured members of Congress that FHA is not broke, and that the agency is taking steps toward improvement in light of the economic struggles facing Americans.
“Put simply, we cannot settle for a country where a shrinking number of people do really well, while more Americans barely get by,” Galante said in prepared remarks.
The FHA will work toward bringing private capital back; protecting current residents; economic growth initiatives; and “reducing regulatory burdens and increasing efficienty—including streamlining, simplifying, and reforming current programs,” Galante said.
Galante had previously defended the FHA’s financial health, stating that reports and industry analysis had it wrong in indicating FHA could require a potential bailout. Pending the premium increases and future changes, Galante said the fund will return to its 2% capital reserve level in 2015.
Written by Elizabeth Ecker