U.S. Sen. Bob Corker (R-TN) has announced his support of the Federal Housing Administration (FHA) for following through on steps that Sen. Corker requested to get the Administration back to solvency. In December, Sen. Corker secured a commitment from FHA Commissioner and Assistant Secretary for Housing Carol Galante to make substantial changes to FHA underwriting requirements in order to begin restoring financial stability at FHA after substantial losses, primarily from a flawed reverse mortgage program.
“I am pleased that the FHA is following through on the steps we discussed last year to strengthen its fund and to get itself back to solvency, but this is only a first step in fundamentally reforming our system of housing finance so that we are not completely reliant on the government—and on taxpayer losses—to support homeownership,” said Sen. Corker.
Galante sent Corker a letter on Dec. 18 committing unequivocally to the following important reforms to be put in place by Jan. 31, 2013. Recently, the FHA:
►Announced the curtailment of the popular fixed rate reverse mortgage program, the source of outside losses at FHA over the past few years;
►Established a manual underwriting requirement for loans with credit scores below 620 and debt-to-income ratios above 43 percent; and
►Established a five percent downpayment requirement for mortgages in excess of $625,500.
Corker has continually expressed concerns over the pace of reforms at FHA, most recently raising several issues with U.S. Department of Housing & Urban Development (HUD) Secretary Shaun Donovan at an early December banking committee hearing on the state of FHA’s financial condition.