FHA Reform Bills Introduced

Democrats and Republicans on the House Financial Services Committee have introduced competing bills to reform the Federal Housing Administration single-family program.These bills differ mainly on the pricing of mortgage insurance premiums. The reform bill introduced by Judy Biggert, R-Ill., H.R. 1752, is the same bill the House passed by a 415-7 vote last fall. It authorizes the agency to charge risk-based premiums, which the Bush Administration supports. "My bill will give low- and moderate-income borrowers a safer alternative to the kinds of subprime loans that quickly go south," Rep. Biggert said. The FHA bill introduced by Rep. Maxine Waters, D-Calif., and committee chairman Barney Frank, D-Mass., also is directed at offering borrowers a safer and more affordable alternative to subprime loans. However, the Democrats bill essentially keeps the current FHA premium structure in place so everyone pays the same premium. To cover higher losses associated with subprime lending, Rep, Frank recently said he wants to tap revenues generated by changes to the profitable FHA reverse mortgage program to subsidize single-family premiums.