Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho) urged Congress earlier this month to move forward on reforms to the Federal Housing Administration, following the release of a report on the 2013 FHA Solvency Act.
The report was released by the Congressional Budget Office and showed the legislation—introduced by Johnson and Crapo—would cut federal discretionary spending by $514 million between 2014 and 2018. The legislation would require the FHA, which is currently required to maintain a two percent capital ratio, to build its capital ratio to three percent within 10 years.
The legislation would also impose additional reporting requirements and require evaluation of single-family programs and reforms if the FHA fails to meet certain targets.
“Last week’s FHA actuarial report contained encouraging news and demonstrates that the FHA is moving in the right direction, but more still needs to be done to provide the FHA stability for the long-run,” Johnson said. “The FHA Solvency Act is a commonsense measure. It will provide the Federal Housing Administration the tools it needs to continue to help qualified borrowers realize the dream of homeownership and inject counter-cyclical support to the housing market in times of stress—all while saving the taxpayer money.”
An earlier report from the FHA showed that while the agency has improved its financial standing, the agency still faces a deficit.
“The Congressional Budget Office’s estimates show that we can strengthen the FHA while decreasing our federal deficit,” Crapo said. “At a time when our national debt is at a record high, it is vital that we work together to pass commonsense reforms that can move us toward an improved, more responsible fiscal path. While I am encouraged FHA has improved its financial standing over the previous year, we must do more to protect taxpayers from the liabilities of this fund.”