The Senate Banking Committee approved a bipartisan compromise measure Wednesday to ensure stability in the mortgage market while protecting taxpayers.
Sens. Tim Johnson, D-SD, and Mike Crapo’s, R-ID, bipartisan Federal Housing Administration Solvency Act of 2013 passed by a vote of 21-1, and included a manager’s amendment incorporating proposals from committee members from both parties to further strengthen the FHA’s books and ensure qualified borrowers continue to have access to credit.
In April, the FHA announced it may need to tap up to $943 million in taxpayer bailout funds, according to the White House and the Federal Housing Administration.
"This bill will give the Federal Housing Administration the tools it needs to get back on track, so it can continue to help qualified borrowers realize the dream of homeownership and provide stability to the housing market in times of stress," said Chairman Johnson.
He added, "This was a bipartisan effort from start to finish. The reforms we approved today are the product of a lot of hard work from members on both sides of the aisle, and I appreciate the spirit of bipartisanship and open debate that my colleagues on the Committee demonstrated throughout the amendment process."
Earlier this year, Johnson and Crapo announced that putting the FHA on solid foundation was one of their top priorities.
"Today’s legislation takes many important steps toward laying that foundation and I thank Chairman Johnson, along with all the members of the Committee, for their work in this effort," Crapo stated.
He added, "I look forward to continuing this strong bipartisan process as we quickly turn our attention toward important, comprehensive reforms to our mortgage market."
The FHA solvency bill will give the FHA stronger underwriting standards, enhanced lender accountability measures and reforms to the reverse mortgage program.
This week, both chambers of Congress approved legislation needed to reduce risk to reverse mortgage borrowers.
The Senate passed The Reverse Mortgage Stabilization Act, which would authorize the secretary of the Housing and Urban Development to create additional requirements to improve the safety and soundness of the Home Equity Conversion Mortgage program.
"This helps ensure that seniors who have worked hard their entire lives to purchase and maintain their home can continue to enjoy the comfort and security of that home," said FHA Commissioner Carol Galante.
She continued, "I commend the House and Senate for their bipartisan efforts to pass this legislation to further secure the financial stability of the FHA."
Overall, the FHA has already taken steps to address its losses using current authorities, and the additional flexibility granted by the proposed legislation will allow the agency to stabilize the housing market.