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Two representatives on the ""House Committee on Financial Services"":http://financialservices.house.gov/ reintroduced Thursday a piece of legislation intended to strengthen the ""Federal Housing Administration"":http://portal.hud.gov/hudportal/HUD?src=/federal_housing_administration (FHA) and ensure the agency's long-term solvency in a time of crisis.
[IMAGE]The FHA Emergency Fiscal Solvency Act, introduced by Rep. ""Maxine Waters"":http://waters.house.gov/ (D-California) and sponsored by Rep. ""Michael Capuano"":http://www.house.gov/capuano/ (D-Massachusetts), is designed to give FHA more flexibility to take action against originators who engage in faulty underwriting or who have high loan losses. Additional measures include authorizing the agency to require indemnification for improperly written loans.
The House committee has held several hearings since the year's start to critically look at FHA's oversight and business practices following the news that the agency's financial situation may necessitate a taxpayer bailout. While FHA's critics insist its government backing is driving out private insurance business, supporters point to the benefits the agency provides for the housing market and for key groups, such as first-time homebuyers.
""This legislation takes an important step towards improving the financial stability of the FHA,"" Waters said. ""Over 400 members of the House voted for an identical bill last Congress, which was drafted in the Financial Services Committee in a collaborative manner and on a bipartisan basis. Working with the Administration, we plan on drafting additional legislation to give FHA more tools to bolster its insurance fund.
""But this is an important first step, and should be considered immediately, given that it was supported on such an overwhelming, bipartisan majority in the last Congress. It is time to move beyond discussion of this issue and take action,"" she added.
Capuano agreed.
""There is clear agreement on the need to provide the FHA with additional risk management tools, increased transparency and enhanced reporting requirements. Let's move forward now with what we agree on and work together to make additional improvements,"" he said.
