Newsroom
March 29, 2012
House panel clears FHA solvency bill
March 29, 2012 – H.R. 4264, a bill to shore up the Federal Housing Administration's mortgage insurance fund, was cleared by the House Financial Services Committee Tuesday on voice vote and awaits House action.
The bill, titled the FHA Emergency Fiscal Solvency Act, was cleared with no amendments, but changes could be sought if the measure goes before the House for debate.
During mark-up, for example, the panel, voting 18-36, rejected an amendment proposed by Rep. Lynn Westmoreland, R-Ga., to cut the FHA loan guarantee from 100 percent of the loan amount to 80 percent. The provision also would provide for some risk retention by lenders.
As cleared by the committee Tuesday, H.R. 4264 would cap the minimum annual mortgage insurance premium at 2 percent; bar abusive lenders from participating in FHA lending; strengthen put-backs so lenders involved in fraud would be required to repay losses to FHA; and improve FHA's internal financial controls, transparency and disclosure requirements.
Under amendments approved at the subcommittee level, the bill also would require tracking of changes in servicing rights and require servicers to comply with FHA guidelines. Those amendments also include a requirement for more regular reports to Congress on the FHA's finances and another focusing indemnification on "serious and material" instances of noncompliance and establishing an appeals process.
NAFCU has long supported FHA's important role in the housing market and is following the progress of H.R. 4264 and other legislation for its impact on credit unions. It has also urged lawmakers to review FHA's policies with respect to strategic mortgage defaults and to consider measures that would discourage defaults by homeowners who can afford to repay their loans.
FHA Commissioner Carol Galante, prompted by Rep. Brad Sherman, D-Calif., told lawmakers Feb. 28 that she agreed there should be a discussion about more consistency in this area. The FHA bars those who strategically default from obtaining additional guaranteed loans for three years; at Fannie Mae, the lockout period is seven years.
The bill, titled the FHA Emergency Fiscal Solvency Act, was cleared with no amendments, but changes could be sought if the measure goes before the House for debate.
During mark-up, for example, the panel, voting 18-36, rejected an amendment proposed by Rep. Lynn Westmoreland, R-Ga., to cut the FHA loan guarantee from 100 percent of the loan amount to 80 percent. The provision also would provide for some risk retention by lenders.
As cleared by the committee Tuesday, H.R. 4264 would cap the minimum annual mortgage insurance premium at 2 percent; bar abusive lenders from participating in FHA lending; strengthen put-backs so lenders involved in fraud would be required to repay losses to FHA; and improve FHA's internal financial controls, transparency and disclosure requirements.
Under amendments approved at the subcommittee level, the bill also would require tracking of changes in servicing rights and require servicers to comply with FHA guidelines. Those amendments also include a requirement for more regular reports to Congress on the FHA's finances and another focusing indemnification on "serious and material" instances of noncompliance and establishing an appeals process.
NAFCU has long supported FHA's important role in the housing market and is following the progress of H.R. 4264 and other legislation for its impact on credit unions. It has also urged lawmakers to review FHA's policies with respect to strategic mortgage defaults and to consider measures that would discourage defaults by homeowners who can afford to repay their loans.
FHA Commissioner Carol Galante, prompted by Rep. Brad Sherman, D-Calif., told lawmakers Feb. 28 that she agreed there should be a discussion about more consistency in this area. The FHA bars those who strategically default from obtaining additional guaranteed loans for three years; at Fannie Mae, the lockout period is seven years.
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