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JOHNSON AND CRAPO UNVEIL DISCUSSION DRAFT OF FHA SOLVENCY ACT

July 15, 2013

Senate Committee on Banking, Housing, and Urban Affairs
For Immediate Release
Monday, July 15, 2013
Contact: Sean Oblack/Sam Gilford (Johnson)
202-224-7391
Mandi Critchfield (Crapo)
202-224-1576
 
Johnson, Crapo Unveil Discussion Draft of FHA Solvency Act Of 2013
Bipartisan compromise measure will ensure stability
in the mortgage market and protect taxpayers
 
WASHINGTON – Today, Senate Banking Committee Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) released a discussion draft of the Federal Housing Administration Solvency Act of 2013, a bipartisan bill to ensure stability in the nation’s mortgage market and protect taxpayers.
 
“The Federal Housing Administration plays a key role in our nation’s housing market, and I am pleased that Ranking Member Crapo and I have been able to work together on this bipartisan legislation,” said Chairman Johnson. “Our bill will give the FHA the tools it needs to get back on stable footing and strengthen a program important to many Americans, and I look forward to working with the rest of the Committee to move this legislation forward.”
 
“Chairman Johnson and I have crafted a bill that includes bipartisan, effective reforms that put FHA on a path toward improving its unsustainable financial condition,” said Ranking Member Crapo. “Many of these reforms include priorities from our colleagues on the Committee, and I am eager to work with them to return the FHA to a strong, self-sustaining insurance program that can remain a viable option for future homeowners.”
 
The Federal Housing Administration (FHA) has helped stabilize the mortgage market since its creation in 1934, by ensuring qualified low- to moderate-income and first-time home buyers have access to mortgage credit. During the 2007-2008 financial crisis the agency served as a critical source of credit and prevented a catastrophic collapse in home values, saving an estimated 3 million jobs and $500 billion in economic output. However, FHA loans made at the height of the crisis suffered heavy losses, and without Congressional action the agency’s balance sheets will remain at risk.
 
The Johnson-Crapo bill will give the Federal Housing Administration tools to improve its financial condition, including strengthened underwriting standards, enhanced lender accountability measures, and reforms to the FHA’s reverse mortgage program. The FHA has already taken steps to address its losses using existing authorities, and the additional flexibility granted by the Johnson-Crapo bill will enable it to stabilize its balance sheet and better protect taxpayers.
           
The Johnson-Crapo FHA Solvency Act will:
 
Strengthen Underwriting and Promote Long-term Solvency
Improve Lender Accountability
Stabilize Reverse Mortgage Program
NOTE: A copy of the bill text is available here. A section-by-section description of the legislation is available here.
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