FHA Reform (With RBP) Deemed Top Priority

The Bush administration is demanding that Congress produce a stand-alone Federal Housing Administration modernization bill that authorizes the mortgage insurance agency to charge risk-based premiums -- which is deliberately absent from the House-passed and Senate-passed versions. The Senate has placed its FHA bill in larger foreclosure prevention legislation that the White House is trying to derail. The Senate bill contains a 12-month moratorium on risk-based pricing. The House FHA bill places restrictions on RBP. "Any bill must give the FHA the tools needed to price for additional risk," FHA Commissioner Brian Montgomery told a House panel. Congress needs to make the FHA bill a "priority over other housing legislation," Mr. Montgomery testified. "As a first order of business, a good FHA modernization bill must be sent to the president." The FHA commissioner also explained that the White House opposes funding for cities and states to purchase foreclosed properties because it would benefit lenders who own a lot of vacant and foreclosed properties. "In addition, it may have the unintended consequence of making foreclosure a more attractive option for lenders," he said.