UPDATE 1-U.S. senator seeks to bring FHA bill before Senate

Thu Dec 13, 2012 5:59pm EST

WASHINGTON Dec 13 (Reuters) - A top U.S. Senate Democrat on Thursday said he would push for a vote on a bill aimed at placing the U.S. Federal Housing Administration on firmer financial footing before lawmakers leave Washington for the holidays.

In a letter obtained by Reuters, Senate Banking Committee Chairman Tim Johnson said he was calling on his colleagues to bypass the usual committee process and back the bill with a speedy vote. The legislation has already passed the House of Representatives and would go straight to President Barack Obama for his signature if the Senate approves it.

"I believe this is a necessary and responsible step to protect the taxpayers given the short amount of time left in the legislative session," Johnson said in the letter to Republican Representative Spencer Bachus.

The FHA backs 15 percent of all U.S. mortgages used for home purchases. The agency, a main source of funding for first-time home buyers and those with modest income, provides liquidity to the housing market by insuring lenders against losses on loans.

It is facing a projected $16.3 billion deficit in its insurance fund, which has raised concerns it will need a taxpayer bailout. The bill is aimed at reducing the FHA's need for a cash infusion from the U.S. Treasury Department.

The legislation, which cleared the House on a strong bipartisan vote, would set a minimum rate for the annual premiums paid for mortgage insurance, allow the FHA to exclude poorly performing lenders from the program and tighten the agency's oversight of delinquent loans, among other measures.

It is unclear whether the measure has enough support to pass the Senate. Some Republican senators believe it falls short of what is needed to prevent the FHA from going to the Treasury for cash.

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