House Passes NCSHA-Supported FHA Reform Bill

On June 10, the House passed the FHA Reform Act of 2010, H.R. 5072, which authorizes HUD to increase FHA's annual single-family mortgage insurance premium and expands FHA’s enforcement authority.  The bill was introduced by House Financial Services Committee Chairwoman Maxine Waters (D-CA) to help FHA bolster its sagging capital reserves and reduce risk to the FHA insurance fund.  NCSHA, the National Association of Realtors, the National Association of Home Builders, the Mortgage Bankers Association, and several other housing industry groups supported the bill.

According to the press release the House Financial Services Committee published June 10, H.R. 5072 will “strengthen FHA’s finances and save taxpayers $2.5 billion over five years, while still providing affordable mortgage insurance to the individuals FHA is intended to serve; provide FHA with enhanced authority to crack down on lenders engaged in fraud or misrepresentation or failing to comply with FHA guidelines for originating or underwriting loans; and require FHA to improve its internal controls to better manage risk and to provide transparent data to the public and to Congress.”  The same day, HUD published Secretary Donovan's statement supporting the bill. 
 
During consideration of the bill, the House accepted several amendments, including one offered by Waters authorizing HUD to increase the FHA maximum mortgage limits for micropolitan counties surrounded by higher cost areas and experiencing significant growth.  The House defeated an amendment offered by Financial Services Committee member Scott Garrett (R-NJ)  that would have increased the FHA down payment requirement from 3.5 percent to 5 percent.  NCSHA opposed increasing the FHA down payment requirement.
 
There is no similar bill in the Senate.  The Senate may consider the House-passed bill later this year, but Senate leaders have not stated when they plan to do so.