Senators Introduce Bipartisan Bill to Strengthen FHA

The ""Senate Banking Committee"":http://www.banking.senate.gov/public/index.cfm?FuseAction=Home.Home reached a milestone in its efforts to stabilize the ""Federal Housing Administration (FHA)"":http://portal.hud.gov/hudportal/HUD?src=/federal_housing_administration with the release of a discussion draft of a new bill Monday.

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""The Federal Housing Administration Solvency Act of 2013,"":http://www.banking.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=230fb6c1-ffc0-4ea7-beee-c2b4e6d9d261 authored by Committee Chairman ""Sen. Tim Johnson (D-South Dakota)"":http://www.johnson.senate.gov/public/ and Ranking Member ""Sen. Mike Crapo (R-Idaho),"":http://www.crapo.senate.gov/ has provisions to strengthen underwriting, make lenders more accountable, and strengthen the FHA's reverse mortgage program.

""Our bill will give the FHA the tools it needs to get back on stable footing and strengthen a program important to

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many Americans, and I look forward to working with the rest of the Committee to move this legislation forward,"" Johnson said.

The FHA helped save about 3 million jobs and ""prevented a catastrophic collapse in home values,"" according to a ""press release"":http://www.banking.senate.gov/public/index.cfm?FuseAction=Newsroom.PressReleases&ContentRecord_id=e44c2f8e-f4e7-c65c-536e-29c1b128cd01 from the two senators Monday.

""However, FHA loans made at the height of the crisis suffered heavy losses, and without Congressional action the agency's balance sheets will remain at risk,"" the press release stated.

Johnson and Crapo's act would raise the Mutual Mortgage Insurance Fund's minimum capital reserve to 3 percent and require evaluation of FHA premiums on an annual basis to ensure they cover risks and maintain minimum capital reserves.

The act also calls on HUD to consolidate lender guidelines and expand the amount of damages FHA can seek from lenders.

""These new authorities will better protect taxpayers and hold lenders accountable when they break the rules,"" according to the senators.

Lastly, the act gives authority to the HUD secretary to oversee FHA's reverse mortgage program with input from the public.