WASHINGTON (Reuters) - Republicans in the U.S. House of Representatives pressed the Obama administration on Tuesday to turn over documents that might reveal more about the Federal Housing Administration’s shaky finances.
“It is imperative that Congress fully understand how and why HUD was unable to anticipate the apparent rapid decline in the health of (FHA’s mortgage insurance fund),” six Republicans on the House Financial Services Committee said in a letter to Housing and Urban Development Secretary Shaun Donovan. HUD is the FHA’s parent agency.
Texas Representative Randy Neugebauer, a Republican member of the committee who signed the letter, said the information lawmakers are seeking would help them as they consider steps to bolster the agency’s operations before it runs out of cash.
“Taxpayers are heading toward another bailout and we’re trying to ascertain why - and more importantly - how we can keep that from happening,” he told Reuters.
An independent audit last month showed the FHA was facing a projected $16.3 billion deficit, suggesting it may need to tap a credit line with the U.S. Treasury to stay solvent for the first time in its 78-year history.
The FHA, which insures 15 percent of all U.S. home purchase loans, is the main source of funding for first-time home buyers and those with modest incomes.
The letter asked Donovan to disclose how the audit was prepared and to provide a clearer explanation as to why the FHA’s insurance fund had shrunk. Lawmakers requested a response and relevant documents by January 18.
The lawmakers questioned “optimistic predictions” that were provided by the agency last year, which they called a “stark departure” from the latest audit.
FHA’s capital reserves have been below levels mandated by Congress for four straight years. Donovan has defended the agency, saying it is taking aggressive action to protect the insurance fund while helping the housing market fully recover.
Senate Banking Chairman Tim Johnson, a South Dakota Democrat, has been pushing for quick Senate approval of a bill aimed at reducing the FHA’s need for a cash infusion that cleared the House on a bipartisan vote.
The legislation 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.
But with time running out on the legislative clock and with some Senate Republicans interested in more comprehensive reforms, it appears likely any legislative effort to strengthen FHA’s balance sheet will get pushed into next year.
“That bill has languished like so much does in the Senate,” said Representative Scott Garrett, a New Jersey Republican member of the House panel who also signed the letter. “I doubt we’re going to see any resolution here before the end of the year.”
Reporting by Margaret Chadbourn; Editing by Dan Grebler