FHA Report Highlights Need for PATH Act
WASHINGTON, DC—Congressman Randy Neugebauer (R-TX), Chairman of the Financial Services Subcommittee on Housing and Insurance, released the following statement after reviewing the Federal Housing Agency’s (FHA) Annual Report to Congress Regarding the Financial Status of the Mutual Mortgage Insurance (MMI) Fund.
The report showed some improvement in the Fund’s net worth and capital reserve ratio. However, both numbers remain negative, with the Fund’s net worth estimated at negative $1.3 billion, and the capital reserve ratio at negative .11%; well below the 2% floor required by Congress.
“I’m pleased to see some signs of recovery at FHA,” Neugebauer said. “But the fact remains that the Fund is still underwater. Just a few months ago, FHA was given a $1.7 billion taxpayer-funded bailout. Without serious reforms, it may require another bailout in the future.
“There’s only so long that you can keep plugging holes in a sinking ship. If we want FHA to continue to help first-time and low-income borrowers achieve their dreams of homeownership, then we need to go back to the blueprint and repair the structural flaws.
“I believe that homeownership not only benefits America families, but also our neighborhoods and communities. So I’d like to see FHA get back on truly sound financial footing. That’s why I co-authored the Protecting American Taxpayers and Homeowners (PATH) Act.
“The commons sense reforms in the PATH Act would create a more sustainable, sensible and efficient FHA by achieving four objectives:
“First, it gets FHA back on sound financial footing so taxpayers are better protected.
“Second, it clearly defines FHA's mission to ensure that the Agency is narrowly focused on serving first-time homebuyers and creditworthy low-to-moderate-income borrowers.
“Third, it shifts risk away from the taxpayers by ensuring the Agency is complementing the private sector, not directly competing with it.
“Finally, it ensures that FHA is run as if it were an independent mortgage insurance company, free from political influence, and with the ability to be nimble, making real-time business decisions that protect taxpayers.
“Today’s report underlines just how important it is to pass the PATH Act and get FHA back on track.”