FHA Reform Act of 2010

Floor Speech

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Ms. WATERS. Mr. Chairman, I yield myself such time as I may consume.

Mr. Chairman, the manager's amendment would make technical corrections to the underlying FHA Reform Act of 2010 and would respond to a GAO request for more time to complete the mandated study on FHA.

This amendment would also facilitate HUD's implementation of a recently finalized rule whereby FHA will no longer directly approve loan correspondents or mortgage brokers but will require lenders to approve brokers.

Under the language proposed in this amendment, loan correspondents would be permitted to continue closing loans in their own name, a critical business function, and continue to utilize table funding arrangements.

This amendment also addresses eligibility for FHA loans by requiring FHA borrowers to have a valid Social Security number and limiting FHA loans to only U.S. citizens and legal immigrants. This language ensures that undocumented immigrants or other individuals who are in the country unlawfully cannot get FHA mortgages, while still providing that lawful immigrants can continue to stimulate demand in the U.S. housing market through the purchase of homes.

Finally, this amendment provides that the Secretary may increase loan limits for micropolitan counties surrounded by higher-cost areas that are experiencing significant growth.

Again, this amendment strengthens an already strong bill, and I urge my colleagues to support it.

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

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Ms. WATERS. I would like to thank my colleague from California. I certainly support this amendment.

The gentleman from California has been one of the most active Members of this Congress in bringing attention to the economic fallout of the foreclosure crisis. I am well aware that his district located in my home State of California has one of the highest foreclosure rates in the country. California has the Nation's fourth highest foreclosure rate with one in every 192 housing units receiving a foreclosure filing last April.

Unfortunately, due to the economic impacts of foreclosures on communities, high foreclosure rates are sometimes accompanied by high unemployment rates. At 13 percent, California's unemployment rate is higher than the national unemployment rate of 9.5 percent. By prioritizing foreclosure counseling services to the hardest hit areas, this amendment would ensure that the homeowners most in need of these services would receive them, helping to stabilize communities that are already facing economic troubles.

I support this amendment, and I certainly thank the gentleman for offering it. I hope my colleagues will vote ``yes.''

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Ms. WATERS. I thank the gentleman for this amendment which would ensure that FHA borrowers who are having difficulty paying their loans would receive counseling about credit risk and financial management in addition to information about loan modification assistance and the availability of housing counseling.

Financial literacy is an important tool for empowering consumers, especially those consumers who are having difficulty making mortgage payments. The gentleman's amendment would enhance the housing counseling resources provided by the bill. By allowing borrowers to learn about how to manage their non-mortgage debt, they could be helpful in ensuring that they are able to remain current in their mortgages after modification.

I support this amendment, and I urge an ``aye'' vote.

I yield back the balance of my time.

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Ms. WATERS. Mr. Chairman, this amendment reiterates the existing authority of the Secretary of Housing and Urban Development to raise down payment standards if he deems it necessary to ensure the financial health of FHA, and that is exactly what Secretary Donovan, with the help of Commissioner Stevens is doing because data indicates it is the best thing to do for the current economic environment. In addition, the Secretary has the authority to reduce this down payment should economic conditions change and data indicates that it can be done while preserving the health of the capital reserves.

This amendment also calls for the Secretary to provide an annual report on the implementation of the minimum down payment requirement, the impact on FHA's capital reserves, the housing market generally, all the number of FHA borrowers, and the impact of any proposed changes on borrowers on the fund.

I believe this is a sensible amendment that increases transparency and accountability and should receive strong, bipartisan support, and I thank Congresswoman Bean for all of the work that she's done on this committee and for this amendment.

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