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Posted June 18, 2008
Corker Pleased FHA Modernization Is Included In Housing Bill
WASHINGTON, D.C. – U.S. Senator Bob Corker (R-TN), a member of the Senate Banking, Housing, and Urban Affairs Committee, said on June 17 he is pleased that modernization of the Federal Housing Administration (FHA) has been included in the bipartisan legislation announced today by U.S. Sens. Chris Dodd (D-CT) and Richard Shelby (R-AL), chairman and ranking member of the Senate Banking Committee. The bill is expected to be debated in the Senate as early as today.
For months in Banking Committee hearings, Corker has urged that “the Federal
Housing Administration must be modernized before we expand its role and exposure
to more risky borrowers,” and has made it clear that he could not support Senate
passage of housing reform legislation that did not include twice-passed Senate
language to modernize the FHA.
“It is absolutely essential that any comprehensive housing reform legislation
includes language to modernize the FHA. If we are going to use the FHA to
respond to the rise in mortgage foreclosures, at the very least we need to give
it the tools it needs to do that job in an effective and fiscally responsible
way. If the FHA is unable to safely account for the additional risk posed by
delinquent borrowers, it will not be able to help as many homeowners and put
taxpayer dollars at unnecessary risk. I am hopeful that we will include these
much-needed reforms in any final package we send to the president.”
According to Dodd and Shelby, the bill includes language “to modernize, streamline and expand the reach of the FHA program.” Notably, the FHA loan limit is increased from 95 to 110 percent of area median home price with a cap at 150 percent of GSE (government-sponsored enterprise) limit, which is currently $625,000, allowing families in all areas of the country to access homeownership through FHA. Down payments of 3.5 percent will be required for any FHA loan and counseling requirements are enhanced to help provide for stable homeownership.
Corker also praised the “long overdue and significant reform to the oversight of
the government-sponsored enterprises, Fannie Mae and Freddie Mac” included in
the bill.
“These entities were created to provide liquidity and stability to the
conventional conforming loan mortgage market and they are needed now more than
ever. Yet there are dangers to our financial system and housing markets in
encouraging further expansion of the GSEs without putting a strong regulator in
place,” Corker said. “This bill takes another step towards creating that world
class regulator with appropriate authorities to oversee these very important
entities.”
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