Fate of Bipartisan FHA Reform Bill May Hinge on Sen. Richard Shelby

During the final days of this Congress, Senate Banking Committee Democrats are continuing to push for passage of a Federal Housing Administration reform bill that will require unanimous consent.

An objection by one senator would kill the bill.

Sen. Pat Toomey, R-Pa., is supporting passage of the FHA reform bill (H.R. 4264) that overwhelming cleared the House by a 407-7 vote. But the ranking Republican on the banking committee, Sen. Richard Shelby (Ala.), has not tipped his hand, according to sources.

Nevertheless, banking committee Democrats are continuing to push for passage this week. 

A Democratic Banking Committee aide said: “Given the urgency of the situation, we remain hopeful that Republicans in the Senate will allow this important legislation to be approved by unanimous consent and send the bill to President Obama to be signed into law before the end of the year,” the aide added.

The House-passed FHA reform bill would give the Department of Housing and Urban Development more powers to police lenders and require indemnification for bad loans as a way to reduce FHA loan losses. 

The financially strapped FHA mortgage insurance fund may need to borrow from the U.S. Treasury later this year to pay for claims on bad loans. 

Behind the scenes, Sen. Bob Corker, R-Tenn., and HUD officials are negotiating possible administrative changes that FHA could make to reduce its risk exposure. 

One source indicated that the success of these talks may determine Sen. Shelby’s position on the FHA bill. Sen. Shelby’s spokesman could not be reached for comment in time for this story. 

HUD officials also want an agreement with Sen. Corker because it could lead to Senate confirmation of Carol Galante to be the FHA commissioner. She has served as the acting commissioner since April 2011.