Issue Position: Federal Housing Administration

Issue Position

The Federal Housing Administration (FHA), created to serve working and low-income families shut out of the conventional housing market, has helped over 34 million families realize the dream of homeownership since its inception in the darkest days of the Great Depression. And remarkably, the FHA carries out it mission without cost to the taxpayer as it returns money to the Treasury each year through premium generated revenue. Although FHA has been extremely successful in helping families buy what is often their first home, it is time to modernize this agency to reflect the economic realities and dynamic nature of many housing markets.

That's why in April, I introduced the Federal Housing Fairness Act. This legislation would increase the FHA loan limits so that working families in high-cost areas can use the program. Not only would raising these limits bring more people into the FHA program, it will help ensure that working families in high cost of living States are not denied the benefit of this program.

Although the FHA provides homebuyers a real alternative to the sub-prime and predatory lending market, the program has been hampered by insufficient staff levels and structural inefficiencies, making it increasingly unable to compete in many housing markets. The result not only shuts working families, teachers, firefighters, and other public servants out of the housing markets where they work, but can also drives them into risky mortgage products.

In June, I built on the Federal Housing Fairness Act with new legislation, the 21st Century Housing Act. The act would reform and modernize the FHA, and allow for a long needed investment in personnel and technology infrastructure to remain competitive and useful to consumers. The 21st Century Housing Act provides the FHA with the flexibility to offer loan terms up to 50 years to decrease monthly mortgage payments and reduced or zero down payment plans to families that lack the upfront cash for a down payment. The benefit of these investments will provide hundreds of thousands of additional families with safe and affordable home ownership opportunities.

The Federal Housing Fairness Act and the 21st Century Housing Act help to prevent many working families from having to seek out costly mortgages in the sub-prime or predatory loan market while increasing FHA's capacity to serve low- and moderate-income participants and first time homebuyers.

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