Rep Cmte Financial Services
Committee to Assess Financial Health of Federal Housing Administration
Washington, Nov 29 -
The Financial Services Committee will convene a hearing on Thursday with Federal officials and industry experts to evaluate the financial health of the Federal Housing Administration (FHA), the government agency that insures nearly 40 percent of new home mortgages in the U.S.
The hearing comes on the heels of an independent auditor’s report released on November 15 that the FHA may need a taxpayer-funded bailout next year if the housing market continues to deteriorate.
The report found the FHA has just $2.6 billion in cash reserves, down from $4.7 billion last year.
Financial Services Committee Chairman Spencer Bachus said, “Since the housing bubble burst, the FHA has seen its market share increase while its fiscal condition declined. The agency’s capital reserves, which provide funds to absorb homeowner defaults, are alarmingly low. This hearing will help the Committee assess whether FHA can be fiscally self-sufficient and whether a major restructuring of FHA is necessary to ensure its future viability.
“The auditor’s report demonstrates once again why it is vitally important for Congress to create an environment where the private sector can compete on a level playing field with government-subsidized entities in our housing markets,” Chairman Bachus concluded.
The FHA was established in 1934 to provide federal mortgage insurance in order to broaden homeownership, protect lending institutions and stimulate the building industry. According to the FHA, the federal mortgage insurance program currently insures more than $1 trillion worth of mortgages on more than seven million loans. The program was intended to be self-funded, but the nation’s protracted housing downturn and FHA’s deteriorating financial condition have cast doubt on whether the FHA can continue to operate without borrowing from the Treasury. The FHA can borrow from the Treasury without Congressional approval.
Click here to view the Committee’s memo for this hearing.
Witnesses scheduled to testify:
Secretary Shaun Donovan, U.S. Department of Housing and Urban Development
Mathew Scire, Director, Financial Markets and Community Investment, U.S. Government Accountability Office
Patrick Sinks, President and Chief Operating Officer, Mortgage Guaranty Insurance Corporation
Dr. Andrew Caplin, Professor of Economics, Department of Economics, New York University
Debra W. Still, Chairman-Elect, Mortgage Bankers Association
Moe Veissi, President, National Association of Realtors
Sarah Rosen Wartell, Executive Vice President, Center for American Progress