The Senate late Wednesday passed a bill that gives the Federal Housing Administration (FHA)more flexibility to adjust its insurance premium structure, a move that will help rebuild its depleted capital reserves.

The bill (H.R. 5981) allows FHA to raise its annual premium to 1.55% from 0.55%. Approved by unanimous consent, the legislation now goes to the White House for the president's signature.

With this new authority, FHA will lower its 2.25% upfront premium to 1%, but then raise the current 55 basis point annual premium, basing the hikes on loan-to-value ratios.

FHA wants to raise the annual premium to 85 bps for loans with LTVs of up to, and including 95%, and to 90 bps for loans with LTVs above 95%.

The Senate also passed by unanimous consent a bill (H.R. 5872) that increases FHA's loan commitment authority for multifamily, hospital, nursing homes by $5 billion.

The Mortgage Bankers Association (MBA) and other industry groups were pushing for the FHA premium increase to shore up the FHA insurance fund.

"It was an exceptionally productive evening for our prospective," said Bill Killmer, MBA's chief lobbyist.

He noted that the FHA premium flexibility and the additional loan commitments are "extremely important" to MBA's single-family and multifamily stakeholders.

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