Capito Works to Shore Up Housing While Preventing More Waste of Taxpayer Dollars

Capito Introduces Legislation to Reform Federal Housing Administration, Prevent Taxpayer Bailout
Reps. Bachus, Neugebauer, Garrett, Biggert Co-Sponsor Bill
WASHINGTON-Rep. Shelley Moore Capito, R-W.Va., Ranking Member of the Subcommittee on Housing and Community Opportunity, today introduced legislation to prevent risky lending and borrowing practices at the Federal Housing Administration (FHA). Capito's bill, "FHA Safety and Soundness and Taxpayer Protection Act of 2010" is co-sponsored by Financial Services Ranking Member Spencer Bachus (R-AL), Deputy Ranking Member Randy Neugebauer (R-TX), Capital Markets Subcommittee Ranking Member Scott Garrett (R-NJ) and Oversight and Investigations Subcommittee Ranking Member Judy Biggert (R-IL).
The FHA reform bill seeks to shore up revenue for the FHA, which is nearing insolvency, and prevent an impending taxpayer bailout by increasing examination of borrowers and lenders, giving the FHA the ability to increase premiums, implementing a risk-based pilot program and using outside credit risk experts.
"While the FHA's economic state is troubling, I am confident that our legislation will provide the necessary reforms to ensure the viability of the program," said Capito. "A taxpayer bailout of the FHA is simply not acceptable. With swift implementation of our proposed risk management safeguards and revenue enhancements, we can restore the FHA's proper role in the market."
"Thanks to Rep. Capito's leadership, Republicans have a strong plan to address the FHA's deteriorating financial position and avoid the potential for another taxpayer bailout of a government mortgage financing agency," said Bachus. "Her legislation mandates much-needed improvements in FHA's risk management practices, shores up its dwindling capital reserves, and prevents unscrupulous lenders from dumping risky loans into the FHA portfolio."
"We need to put the taxpayers first and make needed reforms to FHA," said Neugebauer. "I appreciate Representative Capito's leadership on a comprehensive bill that will help rebuild FHA's stability and protect the taxpayers. This can be a bipartisan bill, and I hope our colleagues on the Financial Services Committee will join us in this effort to improve the soundness of FHA."
"The government's involvement in the housing market and its negative ramifications for taxpayers has been a great concern to me ever since I came to Congress. Rep. Capito's legislation is an important first step into the broader conversation on risk management and the FHA. I look forward to exploring additional steps we can take to reduce risk to the taxpayer, including increasing the down payment requirement for FHA loans," said Garrett.
"Private lenders have learned a lesson from the real estate bubble, and they are moving to properly account for risk and protect their own investments," said Biggert. "It's past time for the FHA to learn that same lesson, and ensure that taxpayers will not be unfairly left on the hook for risky loans. These reforms will put FHA on a sustainable path, help homeowners into loans they can actually afford, and spare taxpayers from yet another bailout."
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