WASHINGTON The Senate Banking Committee approved legislation to reform the Federal Housing Administration on Wednesday to help stabilize the agency's beleaguered reverse mortgages program and strengthen its underwriting standards.
The FHA Solvency Act of 2013, introduced by Chairman Tim Johnson, D-S.D., and Sen. Mike Crapo, R-Idaho, the top Republican on the panel, would raise the mutual mortgage insurance fund's capital reserve requirement to 3%, require the Department of Housing and Urban Development to evaluate and possibly revise the FHA's underwriting standards using criteria similar to the Consumer Financial Protection Bureau's qualified mortgage rule and give the FHA new authority to hold lenders accountable for making fraudulent or inappropriate loans. It passed the committee by a vote of 21-1, and included a manager's package of amendments allowing the FHA to transfer certain servicing duties and requiring the agency to undergo an annual Federal Reserve stress test, among other provisions.
"This bill will give the Federal Housing Administration the tools it needs to get back on track, so it can continue to help qualified borrowers realize the dream of homeownership and provide stability to the housing market in times of stress," Johnson said in a statement. "This was a bipartisan effort from start to finish. The reforms we approved today are the product of a lot of hard work from members on both sides of the aisle, and I appreciate the spirit of bipartisanship and open debate that my colleagues on the Committee demonstrated throughout the amendment process."