Senator David Vitter Press Release:
Vitter to Push for Tough FHA Reforms to Avoid Future Bailouts
Will introduce amendments to FHA Solvency markup in Senate Banking Committee tomorrow
(Washington, D.C.) – U.S. Sen. David Vitter (R-La.) today announced that he will introduce amendments to reform the Federal Housing Administration (FHA) during the Senate Banking Committee markup of S. 1376, The FHA Solvency Act of 2013 tomorrow.
“It’s clear the FHA has been going down an irresponsible path for years, from their drastic deficits to secret stress tests,” Vitter said. “Instead of managing their funds responsibly, FHA prefers to lean on taxpayers to bail them out. Serious reforms are needed to make sure we protect against any taxpayer funded bailouts in the future.”
Vitter has warned of a potential FHA bailout since 2009, and he has previously introduced legislation to prevent one. Last Congress, Vitter introduced legislation to reform the FHA and ensure it can remain solvent without a federal bailout.
Vitter’s amendments will include requirements for the Department of Housing and Urban Development (HUD) and Treasury to notify Congress and the public if Treasury makes a transfer to HUD for FHA, and for HUD to repay Treasury for any bailout transfer.
Vitter would also like to include: an early term delinquency review, a lifetime ban on additional FHA-backed loans for borrowers with two foreclosures, and a capital reserve requirement for the new multi-family program.
Vitter also wants to establish an annual “Fed stress test” of the FHA. Last week, FHA Commissioner Carol Galante committed to submitting all material the FHA has in regard to a secret stress test that projected massive losses for FHA.
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