December 19, 2013
JOHNSON, CRAPO FILE REPORT ON FHA SOLVENCY BILL
Washington, D.C. – Banking Committee Chairman Tim Johnson and Ranking Member Mike Crapo today issued the following remarks after filing the report on the Federal Housing Administration (FHA) Solvency Act of 2013 (S. 1376). According to the Congressional Budget Office, the bill would reduce federal discretionary spending by more than $500 million over a five-year period of time while forcing the FHA to build up to a 3 percent capital ratio. Last week, the FHA released its independent financial review showing that it has improved its financial standing over the previous year, but still faces a shortfall.
“Last week’s FHA actuarial report contained encouraging news and demonstrates that the FHA is moving in the right direction, but more still needs to be done to provide the FHA stability for the long-run,” said Chairman Johnson. “The FHA Solvency Act is a commonsense measure. It will provide the Federal Housing Administration the tools it needs to continue to help qualified borrowers realize the dream of homeownership and inject countercyclical support to the housing market in times of stress—all while saving the taxpayer money.”
“The Congressional Budget Office’s estimates show that we can strengthen the FHA while decreasing our federal deficit,” Crapo said. “At a time when our national debt is at a record high, it is vital that we work together to pass commonsense reforms that can move us toward an improved, more responsible fiscal path. While I am encouraged FHA has improved its financial standing over the previous year, we must do more to protect taxpayers from the liabilities of this fund. Congress should move as soon as possible to comprehensively reform the FHA and our country’s broader housing finance system.”
The CBO estimates that S. 1376 could save FHA $514 million over the 2014-2018 period, assuming enactment of appropriation laws necessary to implement the legislation’s provisions. The Johnson-Crapo bill will give the FHA tools to improve its financial condition, including strengthened underwriting standards, enhanced lender accountability measures, and reforms to the FHA’s reverse mortgage program. The bill passed out of Committee on July 31 with wide bipartisan support.
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