Last week the House passed H.R. 4264, the "FHA Emergency Fiscal Solvency Act of 2012" by a vote of 402-7. In February, FHA revealed that they were projecting a fiscal loss for this year. Through raising premiums and a financial settlement with mortgage lenders, FHA was able to avoid needing taxpayer dollars to keep the fund solvent.
HR 4264, introduced by Rep. Biggert (R-IL), strengthens FHA's financial solvency by barring unscrupulous lenders from participating in the program; allows FHA to collect losses from lenders who made material errors in underwriting or committed fraud; and strengthens financial oversight and disclosure.The bill will also give FHA flexibility to increase premiums, if needed to restore reserve levels.
NAR was successful in defeating amendments to mandate increased premium levels and reduce the federal guarantee on loans. Previous versions of the bill (which NAR opposed) also included increases to the downpayment requirement, eliminated the loan limit floor, and eliminated the cap on premium increases. Given the concerns about FHA's overall fiscal stability, this bill balances the needs to protect the fund from taxpayer risk, with the need to continue to provide access to safe and affordable mortgage financing.
There is no companion bill in the Senate.