Feb. 28, 2013 – NAFCU Executive Vice President of Government Affairs Dan Berger reiterated the association’s call for tougher oversight of the Federal Housing Administration in advance of today’s Senate Banking Committee hearing on the FHA’s financial condition and current challenges.
The hearing is the second part of the committee’s look into the FHA’s financial situation. In December, the committee heard testimony from Shaun Donovan, secretary of the Department of Housing and Urban Development, following the release of a report showing the FHA was near insolvency.
NAFCU's Dan Berger continues to press for greater oversight
Writing Senate Banking Chairman Tim Johnson, D-S.D., and Ranking Member Mike Crapo, R-Idaho, Berger called on lawmakers to ensure that policies do not unintentionally create an incentive for strategic defaults.
Berger reiterated NAFCU’s concern with the recent trend of homeowners who strategically default on their loans despite having the capacity to make payments. The FHA’s lockout period for preventing these borrowers from getting another loan is three years. By comparison, the lockout period at Fannie Mae is seven years.
While acknowledging the FHA’s recent pledge to step up enforcement of the lockout, Berger said NAFCU remains concerned. Congress should “exercise additional oversight in this area,” he wrote. “This risk to the taxpayer, encouraged by current FHA policy, is a critical part of the safety and soundness conversation that must be reviewed.”
He added that the viability of the FHA is crucial, “especially in providing an option for those who would otherwise be unable to obtain a mortgage in the conventional mortgage market,” Berger said.