Republican leaders on the House Financial Services Committee are calling for hearings on the financial health of the ailing Federal Housing Administration (FHA) reserve fund, which recently reported a sharp drop in its capital ratio to 0.57%. Citing FHA's deteriorating financial position, Reps.

Spencer Bachus (Ala.) and Shelley Capito (W. Va.) are urging committee chairman Barney Frank, D-Mass., to schedule a hearing as soon as possible.

"If home prices do not recover, the economic value of the Mutual Mortgage Insurance Fund could fall below zero. We are concerned that such a drop could force [the Department of Housing and Urban Development to request an appropriation from Congress," the two Republican lawmakers say in a letter.

FHA officials maintain that they have taken corrective actions and the insurance fund is in no imminent danger of running out of cash.

If necessary, the agency could raise the FHA upfront premium to keep the fund in the black. However, Bachus and Capito also have concerns about FHA's technological and management capacity.

"It is incumbent upon our committee to get prompt answers to many of the questions surrounding FHA's risk management practices and finances," the Republicans say in a letter to  Frank.

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