FHA said likely to require more funds
Sept. 27, 2013 – The Federal Housing Administration reportedly will be looking to Treasury for financial help at month-end – maybe $1 billion or more, and that news drew new criticism from House Financial Services Chairman Jeb Hensarling, R-Texas.
“Reports that the FHA will require its own billion dollar bailout reinforce the need for the PATH Act, our proposal to create a sustainable housing finance system,” Hensarling said in a statement. “The PATH Act not only ends the bailout of Fannie and Freddie, it includes reforms that will help ensure the FHA is solvent.”
NAFCU testified this summer on the PATH Act – H.R. 2767, the “Protecting American Taxpayers and Homeowners Act.” The measure would phase out Fannie Mae and Freddie Mac over a five-year period but would also ease some provisions of CFPB mortgage rules that take effect in January. NAFCU, while supporting the regulatory relief in the mortgage rule changes, is also pressing for continued, unfettered access to the secondary mortgage market for credit unions and pricing that is based on loan quality.
The Wall Street Journal reported that FHA’s troubles are said to derive largely from troubles with its home equity conversion program – reverse mortgages – and troubles from riskier mortgages that were issued before the housing downturn. It has increased fees to borrowers and tightened some on lender oversight, but it also recently announced it was easing the lockout period on some underwater homeowners seeking refinancings.
The report also said ongoing improvements in economic conditions could position the FHA for a surplus in the spring.
The Wall Street Journal blog post