On Thursday, the House Financial Services Committee approved legislation to ensure that the Federal Housing Administration (FHA) remains viable and continues its mission of insuring mortgage loans.

Congresswoman Maxine Waters (D-CA), Chairwoman of the Housing and Community Opportunity Subcommittee, drafted the FHA Reform Act of 2010 (H.R. 5072) in response to recent events that caused FHA’s reserves to fall below the two percent level required in law. The Act will empower FHA to improve its financial position by allowing the agency to adjust its premium structure for new borrowers, while still providing affordable mortgage insurance to the individuals FHA is intended to serve including low-income and minority borrowers and individuals in traditionally underserved areas. H.R. 5072 also provides FHA with enhanced authority to terminate lenders’ approval to originate or underwrite loans backed by FHA insurance when FHA finds evidence of fraud or noncompliance. The Act also formally creates a new Deputy Assistant Secretary at FHA for Risk Management and Regulatory Affairs.

MHI members can contact Rae Ann Bevington at rbevington@mfghome.org.