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Subcommittee Approves Bills Improving Fiscal Health of FHA, Affordable Housing Programs

Press Release

Location: Washington, DC

The Insurance, Housing and Community Opportunity Subcommittee approved a bill today providing the Federal Housing Administration (FHA) with the tools it needs to shore up the health of the FHA mortgage insurance fund.

The FHA currently insures more than $1 trillion worth of mortgages on more than 7 million loans. An independent auditor's report released last year found that FHA's finances have deteriorated to the point where the agency will need a bailout in 2012 if the housing market worsens.

The Financial Services Committee has held three hearings in the past year focused on ways to shore up the financial health of the FHA.

The Subcommittee today approved the FHA Emergency Fiscal Solvency Act. The bill strengthens the Mutual Mortgage Insurance Fund by:

Establishing minimum annual premiums for mortgage insurance;
Barring unscrupulous lenders from participating in the program;
Requiring repayment of losses to FHA by lenders who committed fraud; and
Improving the FHA's internal financial controls, transparency, and disclosure requirements.

"The FHA's cash reserves are down to dangerous levels, and taxpayers cannot afford another Fannie- and Freddie-style bailout," said Rep. Biggert. "This Administration needs to enforce stronger standards and create room for the private sector to replace taxpayers as the primary source of funding. The FHA is facing an urgent fiscal crisis, and this proposal gives HUD Secretary Donovan emergency tools to wind down the risk before it's too late."

The bill was approved by a voice vote.

The Subcommittee approved two additional bills on Tuesday -- the Affordable Housing and Self-Sufficiency Improvement Act, which improves the efficiency and operations of the Section 8 housing voucher program; and the Homeless Children and Youth Act, which harmonizes conflicting definitions of "homeless person" so homeless children and youth can receive needed housing assistance.

The Affordable Housing and Self-Sufficiency Improvement Act expands opportunities for low-income families that receive housing assistance to achieve self-sufficiency and reduces the costs of HUD's affordable housing programs. Specifically the Act streamlines duplicative or onerous regulations and helps foster self-sufficiency among recipients of housing assistance.

"Our legislation will modernize and reform the Section 8 program to help local housing authorities put more low income tenants on a path to self-sufficiency," said Rep. Biggert. "The bill more effectively links rental assistance with new opportunities for job training, employment, financial literacy, and education, and it gives housing authorities the flexibility they need to focus on providing housing, not complying with outdated requirements. I'm grateful to all those who have been working with us for months to develop this blueprint and help more struggling families find secure, affordable housing."

The bill was approved by a voice vote.

The Homeless Children and Youth Act harmonizes HUD's definition of homeless children to that of other government agencies like the Department of Education, allowing HUD to more accurately estimate the number of homeless persons in the United States.

"Every child should have a safe place to sleep at night and a chance at a brighter future," said Rep. Biggert. "This bipartisan legislation cuts through the red tape at HUD that currently bars some of our most vulnerable kids from accessing the help they need. For example, a child working with the homeless liaison at a local school district would be eligible for transitional housing and services from HUD without having to fight through a new layer of federal bureaucracy. Today's vote is an important victory for homeless kids, and the sooner we send this bill to the President, the better."

The bill was approved by a voice vote.

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