The House of Representatives quickly passed a slimmed-down FHA reform bill Friday that appears to be an attempt to make it easier for the Senate to pass legislation before the August recess.
The bill (H.R. 5981) gives FHA more flexibility to adjust its mortgage insurance premium structure and help rebuild the insurance fund's capital reserves. Allowing the agency to raise its annual premiums would increase FHA's revenues by $300 million a month, according to Department of Housing and Urban Development officials.
Senators Mark Begich, D-Aka., Sherrod Brown, D-Ohio, and David Vitter, R-La., have been working to pass a larger FHA reform bill. The House actually passed a more expansive FHA reform bill back in June, a measure that allows the agency to raise its annual premium from 0.55% up to 1.55%. That bill (H.R. 5072) also strengthens the insurer's hand in getting lenders to indemnify FHA for bad loans and terminate firms with excessive early default rates.
But odds are increasing the Senate will go with a slimmed down version (H.R. 5981) that only raises the annual premiums.
"The problem is the larger bill also includes important enforcement powers for FHA" to manage its $857 billion insured portfolio, said Howard Glaser, who runs a Washington legislative and regulatory consulting firm, the Glaser Group.
"Regardless of what happens in the Senate. FHA is still going to need those powers," he said.
FHA lenders originated $26.4 billon of single-family loans in June, an 18% increase from May, according to new figures released by the agency.
Nearly 77% of the 150,900 FHA loan endorsements were for borrowers purchasing a home. The average FICO score of buyers was 698.
Of the 29,800 refinancings in June, 67% were conventional borrowers seeking low-downpayment FHA loans.
The May report found that the Hope for Homeowners program helped just seven underwater borrowers with conventional loans refinance into a new FHA-insured loan. Six H4H transactions were completed in May.
Meanwhile, FHA reported that 8.32% of its insured single-family loans are 90 days or more past due, down 10 basis points from the previous month. The serious delinquency rate on FHA loans has sloped downward since February when the rate was 9.17%.