Waters Statement on FHA Reserves Shortfall
Congresswoman Maxine Waters, Ranking Member of the Committee on Financial Services, released the following statement in response to reports of a likely shortfall in capital reserve funds at the Federal Housing Administration:
“During the worst of the crisis, when the private sector virtually left the market, the Federal Housing Administration stepped up and provided the liquidity that kept our struggling housing market afloat. This is the countercyclical role of FHA, as it has been throughout the course of its nearly 80-year history.
Despite corrective action taken in recent years, the severity of the financial crisis weakened the health of FHA’s Mutual Mortgage Insurance Fund. Although this one-time transfer of funds from the Treasury is legally necessary, it’s important to note that FHA is far from bankrupt, holding over $30 billion in reserves and continuing to generate revenue. In fact, these funds are only required because FHA is bound by law to hold the revenue necessary to pay any potential claims over the next 30 years, without taking into account future business. Above all, we must strive to have a healthy, viable FHA that can continue to facilitate homeownership for first-time and low-income homebuyers, while standing ready in the unfortunate event of another housing downturn.
Since 2010, I have joined the Obama Administration in pushing for comprehensive FHA solvency legislation that would have achieved just that. Unfortunately, obstruction by Senate Republicans prevented any progress. Now, Republicans are focused on the PATH Act, which does not address FHA solvency, instead undercutting the entirety of the program.”