FHA Reform Act of 2010

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Mr. TURNER. I yield myself such time as I may consume.

Mr. Chairman, I rise today to offer an amendment that caps the temporary authority for the Federal Housing Administration to insure homes in high-cost areas at $500,000. The current temporary authority has the FHA insuring mortgages as high as $729,750.

Only in Washington would a government program insure a mortgage on a home worth $750,000 for a low- and moderate-income program. Permitting FHA loans on a $750,000 home puts American taxpayers at additional risk. Allowing FHA-backed loans on these expensive homes contributes to the overinflated housing values that contributed to the foreclosure crisis from the beginning.

The mortgage foreclosure crisis is not over, Mr. Chairman. There are still too many American families who are confronted every day with the risk that they might lose their homes. Washington should not be in the role of enabling this crisis. We need to begin the process of reducing the dependence of these communities from artificial support, and we need to give the private sector the ability to step back into the market.

The best place to facilitate this is to lower the FHA loan limit to homes under $500,000. The FHA has traditionally focused on low- to moderate-income families who are seeking to purchase homes--and for good reason--as these buyers need the greatest assistance in their home purchases. The FHA should, once again, focus their efforts on these buyers.

Permitting FHA loans to purchase a $750,000 home also means fewer FHA-insured mortgages for Ohio families and for families across America who truly need them. In most of my congressional district in Ohio, the current FHA loan limit is $271,000, which is in line with the loan limit for most of the U.S. I understand that there are high-cost urban areas in our Nation where some homes cost more than in Ohio, but the FHA was designed to help low and moderate homebuyers, and it should focus on more moderately priced homes. Permitting FHA loans for these high-priced homes only limits access to true moderately priced FHA loans for American families who need them.

My amendment seeks to start the process of removing higher income buyers off the government program designed for low to moderate buyers. The effect of this amendment is to limit it to the 179 counties in the country, but it does not reduce the assistance to the moderately priced homes that are the majority of the Nation.

The FHA was intended to assist Americans in achieving the American dream of homeownership. We need to work to ensure that their focus continues to be on those who truly need the help. My amendment would work to that purpose, and I urge my colleagues to support it.

Mr. Chairman, I reserve the balance of my time.

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Mr. TURNER. Well, I appreciate my good friend Mr. Miller's statement.

There is one that I do want to correct, though, which is that all of Ohio would be under his suggested limit of 415. We certainly could have picked a lower number. My community is at 271.

The issue becomes one of, well, we're in a financial crisis, and we're having bailouts and mortgage foreclosures across the country. We look to this issue as one of basic math. The larger the loan amount, the more the risk. When there is fluctuation in the market, a percentage of a larger number is a larger loss, leading to, certainly, an issue of more increased incidences of a likelihood of foreclosure.

Also, the issue of larger loan amounts means fewer loans which could be provided assistance. There is a limited amount here, and with that limited amount, if it is carved up into $750,000 home sales versus those that are going to more moderately priced homes, you certainly will have less resources with which to provide that assistance.

This is basic math. When we look across the country during this mortgage foreclosure crisis, we have to be very concerned about how we ensure that we are assisting home buyers, low and moderate buyers. At the same time, we have to ensure we are not overly inflating the market and that we are not putting the taxpayers at greater risk.

I reserve the balance of my time.

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Mr. TURNER. Mr. Chairman, I urge all of my colleagues to support this measure, which makes good financial and fiscal sense. It would lower the amount, providing greater assistance because there would be a greater number of loans which could be provided assistance. At the same time, it would lower the risk to taxpayers, and it would lower the risk of bailouts by making these higher-cost areas, the more risky areas, conform to an amount that really would be more reflective of our goal of low and moderate home buyers who receive assistance from the FHA.

I yield back the balance of my time.

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