Chairman Jeb Hensarling announced today that the Financial Services Committee will hold a series of hearings throughout the year that focus on the financially troubled Federal Housing Administration, the FHA's outsized role in the nation's housing finance system, and the need to create a sustainable mortgage finance system.
The FHA's single-family insurance fund, which insures more than $1 trillion worth of home mortgages, has a negative economic value of $16.3 billion, according to an actuarial report released by the Department of Housing and Urban Development in November. This means that if the FHA stopped writing new business today, it could not cover the losses anticipated on loans it has already insured.
"The FHA is broke -- bailout broke. We need a sustainable mortgage finance system that gives hardworking Americans opportunities to buy homes they can actually afford to keep. Today, however, the FHA's dire financial condition and dominance of our housing finance system are a clear and present danger to every taxpayer who is now at great risk of having to fund yet another Washington bailout. Without serious reform, FHA may become the next Fannie Mae and Freddie Mac," said Chairman Hensarling, referring to the two federally chartered mortgage finance companies that have already received a taxpayer bailout of almost $200 billion.
The committee's first two FHA hearings will take place in February, Chairman Hensarling said today.
On Feb. 6 at 9:00 a.m., the committee will hear from a panel of housing finance experts and analysts about the FHA's financial condition and its role in the housing market. The hearing will take place in room 2128 Rayburn House Office Building.
On Feb. 13 at 10:00 a.m., FHA Commissioner Carol Galante will testify before the committee on the November 2012 actuarial report that revealed the FHA is on the verge of requiring a taxpayer bailout for the first time in its nearly 80-year history. This hearing will also take place in room 2128 Rayburn House Office Building.
Chairman Hensarling stressed that these two hearings are the first of several the Financial Services Committee will hold at the full and subcommittee levels this spring that focus on the looming financial crisis at FHA, the FHA's mission and performance, and how the agency's policies and practices inhibit the private sector from greater participation in the housing market.
The nation's housing finance market is currently dominated by government-backed entities -- the FHA, Fannie Mae and Freddie Mac. The FHA alone has more than 56 percent of the mortgage insurance market in terms of numbers of loans.