FHA Will Face Ongoing Scrutiny to Deal with “Broke” Status in 2013

The Federal Housing Administration will face upcoming scrutiny from Congress due to its “broke” financial position, the House Financial Services Committee said today. The ongoing conversation on the FHA’s finances will take place through a series of hearings in the coming months, said Chairman Jeb Jensarling. 

Citing a 2012 audit of the administration’s insurance fund, Hensarling noted FHA’s negative economic value of $16.3 billion and its outsized role in the nation’s housing system. 

“The FHA is broke – bailout broke,” he said. “We need a sustainable mortgage finance system that gives hardworking Americans opportunities to buy homes they can actually afford to keep. Today, however, the FHA’s dire financial condition and dominance of our housing finance system are a clear and present danger to every taxpayer who is now at great risk of having to fund yet another Washington bailout. Without serious reform, FHA may become the next Fannie Mae and Freddie Mac.

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The committee will hold the first of the hearings February 6; to include a panel of housing finance experts and analysts. A following hearing February 13 will include testimony from FHA Commissioner Carol Galante on the actuarial review that revealed FHA’s financial position in 2012. 

Written by Elizabeth Ecker