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House, Senate Keep Housing-GSE Reform As Hot Topic
WASHINGTON (7/17/13)--The chairman and the ranking member of the Senate Banking Committee have released a discussion draft of a bill intended to ensure stability in the nation's mortgage market and protect taxpayers.
 
Also in the housing-policy reform arena, legislation that would wind down government-sponsored enterprises Fannie Mae and Freddie Mac and make other changes to the housing finance system has been introduced in the U.S. Senate, and House Financial Services Committee Chairman Jeb Hensarling (R-Texas) unveiled a similar House bill late last week.
 
A hearing on the Hensarling bill is scheduled today.
 
Sens. Tim Johnson's (D-S.D.) and Mike Crapo's (R-Idaho) new draft bill is titled the Federal Housing Administration Solvency Act of 2013.
 
When he released the discussion draft Tuesday, Johnson said in a release, "Our bill will give the FHA the tools it needs to get back on stable footing and strengthen a program important to many Americans."
 
The Johnson-Crapo bill seeks to give the Federal Housing Administration (FHA) tools to improve its financial condition, including strengthened underwriting standards, enhanced lender accountability measures, and reforms to the FHA's reverse mortgage program.

The bill also would:
  • Create a higher minimum capital reserve requirement for the Mutual Mortgage Insurance Fund of 3%. If certain targets are not met as the ratio builds, the FHA's parent agency, the Department of Housing and Urban Development (HUD), would be required to take immediate action to address the shortfall while keeping Congress fully informed;
  • Require that minimum annual mortgage insurance premiums improve the long-term solvency of the FHA program by covering FHA loans' expected risk and maintain the capital reserve ratio; and
  • Require HUD to evaluate and revise as needed underwriting standards using criteria similar to the Consumer Financial Protection Bureau's Qualified Mortgage rule.


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