FHA Reform Act of 2010

Floor Speech

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Ms. WATERS. Madam Chair, I yield myself such time as I may consume.

Madam Chairwoman, I stand in strong support of H.R. 5072, the FHA Reform Act of 2010.

This bill is the product of three hearings on FHA in the past 6 months and bipartisan work with the ranking member of the Subcommittee on Housing and Community Opportunity, Congresswoman Capito. In fact, this bill contains most of the provisions Congresswoman Capito included in her bill on FHA introduced earlier this year.

Moreover, I am proud to say that this bill passed out of the Financial Services Committee on a simple voice vote back in April.

The FHA Reform Act is critical, timely, and important for households across the country. The act will enable the FHA to respond to the current housing and economic crisis and continue its mission of providing homeownership opportunities to millions of Americans.

We know that now, more than ever, preserving this mission is critical. As the private market has contracted, FHA has stepped into the void and injected much-needed credit into our mortgage system. Increasingly, it is the only option available for American homebuyers with less than a 20 percent down payment.

FHA insurance has been particularly important for minority communities, low-income families, and first-time homebuyers. The bill would provide FHA with more flexibility to adjust their annual mortgage insurance premium.

As I understand it, if FHA limits the premium increase to 0.90 percent, as Commissioner Stevens has indicated, new borrowers will see their monthly payments rise by about $42 a month.

Now, while I am reluctant to support providing FHA with more flexibility, I believe that this provision is needed to keep FHA financially healthy. We have also taken steps to ensure that FHA requirements are not excessively onerous for homebuyers.

Secondly, this bill provides FHA with the authority to crack down on lenders that use fraud or misrepresentation or don't originate or underwrite loans in accordance with FHA guidelines. FHA has already taken steps to increase its lender enforcement activities, and the provisions included in this bill will empower them to rout out the bad actors while reserving the program for the lenders that follow the rules.

Thirdly, this bill empowers FHA to improve their internal controls that improve data tracking, risk management, and reporting to the public and to Congress. This includes improving monitoring of early defaults and claims, tracking mortgage information by loan servicers, providing FHA with the ability to contract out for additional credit risk analyses, requiring mortgagees to report to FHA when they stop buying loans from other mortgagees, and requiring a GAO study on FHA.

The bill also creates a new Deputy Assistant Secretary at FHA for risk management and regulatory affairs.

I believe the bill in front of us today is critical for ensuring a strong future for FHA, and I request my colleagues' support.

I reserve the balance of my time.

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Ms. WATERS. Madam Chair, I would simply like to close by thanking Mrs. Capito for all of the work that she put into this legislation and the cooperation that she gave to me and her staff to my staff.

This is a good bill. The differences have been worked out between both sides of the aisle. We worked hard to make sure that we maintained FHA, but that we keep a close watch on it; that, in fact, we give it flexibility, but at the same time ensure the continuity and the consistency of FHA that should be there to provide the guarantees for our citizens that so desperately need them.

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