WASHINGTON, July 31 A U.S. Senate panel on
Wednesday approved a bipartisan bill aimed at bolstering the
finances of the Federal Housing Administration, which may need
to turn to taxpayers for a bailout later this year.
The Senate Banking Committee passed the FHA bill by a vote
of 21 to 1. It was introduced by South Dakota Democrat Tim
Johnson, the committee's chairman, and Idaho Senator Mike Crapo,
the top Republican.
The FHA, which insures about a third of U.S. mortgages,
faces a projected shortfall of $16.3 billion due in part to
defaults on mortgages it guaranteed from 2007 to 2009 as the
housing bubble deflated.
It could be forced to turn to the Treasury Department for a
bailout at the end of September.
"This bill will give the Federal Housing Administration the
tools it needs to get back on track, so it can continue to help
qualified borrowers realize the dream of homeownership and
provide stability to the housing market in times of stress,"
Johnson said in a statement after the vote.
The legislation now goes to the full Senate for a vote, but
that is not likely to occur until after a month-long recess that
begins next week. It could come up for a vote on its own or be
included in a broader housing finance reform package that
lawmakers hope to craft soon.
The bill would require minimum annual mortgage insurance
premiums; require FHA's parent agency, the Department of Housing
and Urban Development, to evaluate underwriting standards; and
create new tools for punishing lenders who commit fraud.
Several changes to an initial draft bill Johnson and Crapo
had introduced were incorporated in the legislation, including a
plan to establish annual "stress tests" of the FHA, similar to
the tests the Federal Reserve runs to gauge banks' health.
"The FHA is broke, plain and simple, and we absolutely have
to get the taxpayers out of the bailout business," said Senator
David Vitter, a Louisiana Republican and the sponsor of the
stress test provision.
The U.S. House of Representatives passed its own FHA bill
last month. Its version would give the agency new authority to
tighten terms for reverse mortgages.