House Passes FHA Fiscal Solvency Act

The House passed the Federal Housing Administration Fiscal Solvency Act Tuesday by a vote of 407 to 7.  The act, as introduced by Representative Judy Biggart (R-IL) authorizes the Department of Housing and Urban Development (HUD) to establish and collect additional annual premium payments for the first 11 years of the term of an insured mortgage in an amount between 0.55 percent and 2 percent of the remaining insured principal balance for certain periods.  It also increases for 1.55 percent to 2.05 percent the 30-year annual premium for an insured mortgage whose original principal obligation exceeds 95 percent of the remaining principal balance.

It also authorizes the Secretary to terminate the approval of the mortgagee to originate or underwrite single family mortgages for more than one area or on a nationwide basis, if the mortgagee has an excessive rate of early defaults and claims.

Acting FHA Commissioner Carol Galante said "We are pleased that the bill passed by the House includes provisions that will allow FHA to continue its efforts to strengthen its enforcement capabilities in order to protect its insurance fund and American taxpayers. We look forward to continuing to work with both chambers to enact final legislation to provide FHA with the tools it needs to build on the vital reforms implemented by this Administration.