The Senate Banking Committee held a hearing on Wednesday on legislation to reform the Federal Housing Administration, during which FHA Commissioner Carol Galante expressed support for the 2013 FHA Solvency Act.
“The FHA Solvency Act of 2013 would provide the FHA with many of the tools Secretary Donovan requested in HUD’s 2012 Report to Congress and in his testimony before this Committee,” Committee Chairman Tim Johnson, the sponsor of the bill, said. “Our discussion draft would better equip the FHA to hold lenders accountable for fraud or inappropriate loans. The bill would also require annual reviews of loan performance and premium levels to ensure that pricing and underwriting standards are appropriate.”
The FHA has struggled to maintain in the wake of the financial crisis, but Galante said the agency has taken steps to boost capital, make changes in loss mitigation and improve its recovery rate, The Hill reports.
Galante warned lawmakers, however, to avoid putting too many constraints on who can obtain loans from the FHA, the mission of which is to serve lower-income borrowers who need lower down payments.
“I don’t think this bill damages our ability to do that so I support the changes requested here,” Galante said, according to The Hill.