House Passes FHA Reform Bill

By a 415-7 vote, the House has passed a bill to reform the Federal Housing Administration single-family program so that it can be competitive again and serve its traditional borrowers, who are being steered into subprime loans.The House vote is largely symbolic because the real fight over the FHA reforms, which the Bush administration supports, will occur during a House and Senate conference on the HUD appropriations bill, which has already cleared the House. However, the House vote certainly increases pressure on Senate appropriators to include key FHA reforms in the Department of Housing and Urban Development appropriations bill. The vote shows that an overwhelming number of House members understand that the FHA can be a "benefit for their low- and moderate-income constituents," FHA Commissioner Brian Montgomery said. With the flexibility to charge risk-based premiums and offer zero-downpayment loans, the FHA can provide credit-impaired borrowers a safer and lower-cost alternative to conventional subprime loans, the commissioner said. "We think we have a pretty good argument," the commissioner said.