Neugebauer Calls for PATH Act in Response to Proposed FHA Bailout

Sep 25, 2013 Issues: Financial Services

WASHINGTON, DC— Congressman Neugebauer released the following statement in response to reports that the Federal Housing Administration will require a bailout:

“Today’s report that FHA may need a $1 billion taxpayer-funded bailout further demonstrates FHA’s dire financial condition.  If true, this latest bailout would be on top of the $180 billion that taxpayers have already sunk into Fannie and Freddie and comes despite previous comments from the Administration that directly contradict the reality of FHA’s poor capital position. The report today solidifies the need for Congress to pass the common-sense reforms in the PATH Act, which would get the FHA back on a sound financial footing.

“Given FHA’s current outsized market share, displacement of private sector alternatives, and the massive risk it poses to taxpayers, I strongly believe it is necessary to go beyond fiscal solvency reforms and address major structural issues at FHA. The PATH Act would do just that.

“Title II of the PATH Act achieves 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 and into the private sector by reducing FHA's footprint and makes sure the Agency is complementing the private sector, not directly competing with it.
  • Finally, it ensures that FHA runs its MMI Fund according to the basic tenets of insurance, including evaluating its risk according to actuarial principles and correlating premiums to actual risk.

“The PATH Act has passed the House Financial Services Committee with my support.  As one of its primary authors, I look forward to supporting this bill through its final passage.”

 

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