Senator Questions Need for FHA

Sen. Christopher Bond, R-Mo., is throwing cold water on Bush administration proposals to revive the Federal Housing Administration single-family program, and he suggested Thursday that it may be time to shut down or privatize the FHA."Maybe it is time to close out FHA mortgage insurance for single families or re-establish FHA as a private government corporation," Sen. Bond said at an appropriations subcommittee hearing on the Department of Housing and Urban Development's budget. The chairman of the HUD appropriations subcommittee noted that the FHA's share of the mortgage market has declined to 4% and its default rate is above 6% -- and he questioned whether the FHA is "needed any more." To revive the federal mortgage insurance program, the FHA wants congressional approval to charge risk-based insurance premiums so it can offer subprime borrowers safer and lower-cost loans. "This will help more low-income families own and keep their homes," HUD Secretary Alphonso Jackson testified. But Sen. Bond complained that the FHA would take on more risk under the new risk-based premiums.