WASHINGTON (1/31/13)--The first House Financial Services Committee hearing of 2013 has now been set: Committee Chairman Rep. Jeb Hensarling (R-Texas) has announced the committee will discuss Federal Housing Administration (FHA) issues on Feb. 6.
The FHA's financial condition and its role in the U.S. housing market will be addressed by housing finance experts, analysts and committee members during the Feb. 6 hearing. The FHA on Wednesday also announced a series of steps to help improve its financial condition.
The hearing will be one of several scheduled throughout the year, Hensarling said in a Wednesday release. FHA Commissioner Carol Galante will testify before the committee on Feb. 13, and more hearings will be held at the full committee and subcommittee levels, the chairman added.
The FHA's single-family insurance fund is facing a projected shortfall of $16.3 billion due to mortgage loan defaults by borrowers. "The FHA is broke--bailout broke. We need a sustainable mortgage finance system that gives hardworking Americans opportunities to buy homes they can actually afford to keep," Hensarling said. He also called for serious reforms to the agency.
The FHA on Wednesday announced some of its own reforms, which aim to improve its financial condition and manage and protect its single-family insurance programs. The changes will also "encourage the return of private capital to the housing market, and make sure FHA remains a vital source of affordable and sustainable mortgage financing for future generations of American homebuyers," Galante said.
The FHA said changes will include:
- Increasing annual mortgage insurance premiums for most new mortgages by 10 basis points (bp), or by 0.10%;
- Increasing premiums on mortgages of $625,500 or more by 5 bp, or 0.05%, to the maximum authorized annual mortgage insurance premium;
- Requiring most FHA borrowers to continue paying annual premiums over the life of loan;
- Requiring lenders to manually underwrite loans for which borrowers have a decision credit score below 620 and a total debt-to-income ratio greater than 43%; and
- Consolidating the Standard Fixed-Rate Home Equity Conversion Mortgage (HECM) and Saver Fixed Rate HECM pricing options.
The FHA said it will soon propose increasing the minimum down payment requirement for home purchases of $625,500 or more to 5%.
For more on the hearings and FHA changes, use the resource link.