WASHINGTON (7/25/13)--The Federal Housing Administration Solvency Act of 2013 "addresses many longstanding legislative requests of the [FHA] in an evenhanded and forward-looking manner," FHA Commissioner Carol Galante said during a Wednesday Senate Banking Committee hearing.
Galante said the bill, which was introduced in draft form on July 15 by Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho), would give the U.S. Department of Housing and Urban Development "the tools to ensure a fiscally sound and vibrant FHA continues to support responsible homeownership and affordable housing for generations to come."
Such tools include strengthened underwriting standards, enhanced lender accountability measures, and reforms to the FHA's reverse mortgage program. (For more on the bill, see July 16 News Now story: House, Senate Keep Housing-GSE Reform As Hot Topic.)
While Galante supports the Senate FHA bill, she also identified topics that should be further discussed as the bill moves forward, including ensuring mortgage servicers are held accountable for their performance, and allowing FHA to shift servicing to a specialized sub-servicer if original servicers cannot fulfill their obligations under the contract of insurance. "This additional authority would minimize losses to the Fund by facilitating more effective loss mitigation, yielding better results for both borrowers and FHA," Galante said.
The committee should also work with the FHA to craft language that best facilitates recapitalization using the full range of options available, Galante added.
An increasingly complex mortgage market, aging FHA systems and infrastructure, a need for additional skills and expertise, and difficulty responding quickly to major risk issues as a result of contractual and statutory limitations are other issues that must be dealt with, Galante said.
For more on the hearing, use the resource link.