WASHINGTON — A House panel on Tuesday approved a bipartisan bill aimed at shoring up the finances of the Federal Housing Administration.
The bill would establish minimum annual premiums for mortgage insurance, while making it easier both to recover losses in cases of fraud and to kick lenders out of the program. In addition, it would create a new chief risk officer position at Ginnie Mae, the federal agency that securitizes FHA mortgages.
The measure, one of four bills passed by the House Financial Services Committee on Tuesday, has the support of industry groups such as the Mortgage Bankers Association, and lawmakers said that it largely has the support of the FHA.
Committee Democrats expressed concern about certain provisions, saying they hope the bill can be modified before the entire House votes on it. But they commended the bill's sponsor, Republican Rep. Judy Biggert, for working across the aisle.
"There was not disagreement on the general sense of the bill, and I hope it moves forward," Rep. Barney Frank, D-Mass., said prior to the vote.
The bill's approval came after the committee rejected a pair of amendments supported by the panel's conservative Republicans that would have made larger changes to the FHA. One of the amendments, offered by Republican Rep. Lynn Westmoreland, would have required FHA borrowers to make 20 percent down payments.
The underlying bill is aimed at shoring up the FHA's reserves, which have been dwindled significantly over the last several years.
Last month, the Obama administration projected in its budget proposal that a key FHA account will be depleted in the next year, though the administration says that funds from the recently announced mortgage settlement have since provided some breathing room.
That account has already fallen to $4.7 billion, which is below a standard established by Congress that requires the balance to remain above 2% of the FHA's total loan guarantees.
Following the bill's approval Tuesday, Biggert said that it will give the Obama administration emergency tools to protect the FHA's solvency.
"We cannot afford another Fannie- and Freddie-style bailout," Biggert said in a press release. "This Administration needs to enforce stronger standards and create room for the private sector to replace taxpayers as the primary source of funding."
Of the three other bills approved by the Financial Services Committee on Tuesday, two passed by voice vote.
A measure sponsored by Biggert would amend a law that prohibits kickbacks to real estate agents to clarify that payments related to home warranties do not constitute violations.
Another bill, sponsored by Republican Rep. Robert Dold, would make what lawmakers of both parties see as a technical correction to the Dodd-Frank Act's requirements that regulators be provided access to swaps data.
The final bill, which passed easily despite opposition from a majority of the committee's Democrats, would exempt certain swap transactions from regulation under Dodd-Frank.
That bill's supporters, including Republican Rep. Scott Garrett and Democratic Rep. Jim Himes, argue that it will ensure that U.S. financial institutions are on a level playing field with international competitors.
The measure drew opposition from Americans for Financial Reform, which argues that it will effectively allow U.S. firms to avoid Dodd-Frank's rules by dealing through their foreign affiliates.
