The House of Representatives is expected to vote on and pass legislation next week giving the Federal Housing Administration (FHA) more flexibility in adjusting mortgage insurance premiums and tools to rebuild its capital reserves.

The FHA reform bill (H.R. 5072) also strengthens the agency's hand in getting lenders to indemnify the agency against bad loans and to terminate lenders with excessive early defaults. The House Financial Services Committee approved the bill by a voice vote in April after rejecting (by a 52-12 vote) an amendment by Rep. Scott Garrett, R-N.J., to increase the FHA's 3.5% minimum downpayment to 5%.

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