An act of Congress will enable the Federal Housing Administration to increase mortgage insurance premiums. In addition, the federal legislature approved a bill that keeps FHA’s multifamily program in business.
A statement today from FHA Commissioner David H. Stevens indicated that H.R.5981 was passed by Congress yesterday.
The bill gives FHA the ability to raise its annual premiums. The Mutual Mortgage Insurance Fund is expected to benefit by $300 million as a result of a new law.
Stevens noted that the agency’s reserves are “perilously low” and the congressional action will enable FHA to address increased demand while calmly bringing the insurance fund back to its congressionally mandated level.
The FHA chief warned, however, that work still remains.
“HUD remains steadfast in its commitment to comprehensive FHA reform legislation, similar to the FHA Reform Act passed earlier this year by the House, which would further enhance FHA’s lender enforcement capabilities and risk management efforts,” Stevens stated. “We hope Congress will take swift action to pass a broader FHA reform bill when they return from the August recess. FHA’s risk management efforts will not be complete without the ability to monitor lender performance and ensure compliance with our rules.”
The Mortgage Bankers Association also applauded the bill’s passage by the Senate last night. The trade group explained that the statutory cap is being raised from 0.55 percent to 1.55 percent — a painful but “necessary” change.
“We are encouraged that FHA Commissioner Stevens has indicated he may not need to raise premiums to the maximum,” MBA Chairman Robert E. Story Jr. said, “and we believe that a small increase in the annual premium, coupled with a decrease in FHA’s upfront premium, will help stabilize FHA while lowering closing costs for many borrowers.”
Another bill, H.R. 5872, is also on its way to President Obama’s desk.
MBA noted that H.R. 5872 increases FHA’s multifamily commitment authority by $5 billion for the remainder of the fiscal year — which ends in September. The legislation helped avert a mid-August suspension of commitments.
Story said the trade group has “tirelessly” lobbied legislators and FHA officials on keeping the program running.
