Capito On Federal Housing Administration Reform

Press Release

Rep. Shelley Moore Capito, R-W.Va., the Ranking Republican Member of the House Financial Services Subcommittee on Housing and Community Opportunity, made the following opening statement at today's Financial Services Committee hearing focused on "The Federal Housing Administration Reform Act of 2009":

"I would like to thank Chairwoman Waters for holding this hearing today on an issue that I believe deserves immediate attention and action by this Committee: reform of the Federal Housing Administration.

"As my colleagues know, last fall Housing Commissioner Stevens testified before this Subcommittee on the challenges faced by FHA's Capital Reserve account which fell below the mandated 2 percent of FHA insurance in force. Not only had the account fallen below 2 percent, it fell to .53 percent of the total insurance in force. This low level could result in an infusion of taxpayer funds to shore up the Capital Reserve Account.

"I am encouraged by steps Commissioner Stevens has already taken to resolve the problems facing the FHA. He has already put in place some changes to address the difficulties at FHA and is in the process of implementing others such as increasing the up-front premium, raising the down payment for low FICO score borrowers, and reducing seller concessions.

"Furthermore, the Commissioner has submitted legislation to this Subcommittee that will give FHA the ability to increase the annual premium and increase enforcement on FHA lenders.

"These are steps in the right direction, but we can do more. Last night, I introduced the FHA Safety and Soundness and Taxpayer Protection Act. This legislation builds on the Commissioner's legislation by making the Chief Risk Officer a permanent member of the FHA Commissioner's team, giving the Commissioner the ability to contract out to properly analyze risk, and enhancing the Commissioner's ability to temporarily suspend lenders who have high rates of early defaults.

"Additionally, we include a pilot program for risk based pricing. I realize the Commissioner and I may not see eye to eye on this issue, but I hope that we can work together to find some common ground and the flexibility needed to implement risk based pricing.

"I look forward to hearing from the Commissioner and our second panel. The sooner we can enact these common sense reforms to the FHA program, the less risk there is of a taxpayer bailout. I look forward to continuing the work we have started to ensure the safety and soundness of the FHA."

Source