On July 19, 2013, Senate Banking Committee Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) released a draft 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.”
Today, the FHA Solvency Act was passed by the Senate Banking, Housing and Urban Affairs Committee by a margin of 21-1. Sen. Tom Coburn (R-OK) was the only Senate Banking Committee member to vote against the bill.
“MBA [Mortgage Bankers Association] applauds the Senate Banking Committee for passing the FHA Solvency Act of 2013. We believe this bill contains many common sense reforms that will help shore up FHA’s finances and ensure the agency continues to fulfill its traditional counter cyclical role,” said David H. Stevens, president and chief executive officer of the MBA. “Chairman Johnson and Ranking Member Crapo worked diligently to draft this bipartisan legislation and we look forward to helping refine key provisions of the bill before it moves to the Senate floor.”
The FHA Solvency Act was drawn up to provide the FHA with the tools necessary to get back on stable footing. The FHA has been dogged by depleted reserves after years of defaults due to the housing bubble burst impacting insurance funds.
“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 Sen. Crapo, in mid-July. “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.”
Both Johnson and Crapo have been busy this month, tackling community-lender concerns, along with receiving input on how to improve the Dodd-Frank Act.
“It pleases me that the Senate Banking Committee can come together and pass bipartisan legislation designed to help the FHA. Senate Bill 1376 will give the FHA the authority it needs to deal with lenders originating bad FHA loans and ensure that the FHA remains solvent,” said John H.P. Hudson, Premier Nationwide Lending's vice president of regulatory affairs. “While there is potential downside for consumers by way of higher insurance premiums, this bill is a step in the right direction of fixing the mortgage market. Hopefully this bill be get the comprehensive, bipartisan support it needs.”