H.R. 5072, the FHA Reform Act of 2010, is both necessary and important legislation. It makes changes to the Federal Housing Administration (FHA) single-family mortgage insurance program administered by the Department of Housing and Urban Development (HUD) that will improve the insurance fund's financial condition and enhance certain enforcement tools to protect against fraudulent or poorly-underwritten and insured loans.

The bill incorporates a majority of the provisions in Ranking Member Capito's legislation, H.R. 4811, the FHA Safety and Soundness and Taxpayer Protection Act, and goes further than the proposals recommended by the Administration. The provisions from the Capito legislation that were incorporated in H.R. 5072 provide additional enforcement, fiscal and risk-assessment tools necessary to adequately administer the program, detect fraud and abuse, strengthen underwriting standards, and protect the taxpayer. In addition, H.R. 5072 authorizes FHA to increase annual insurance premiums, requires indemnification by lenders for loss on loans they originate, and gives authority to the Secretary to require FHA compliance with the SAFE Act. The Secretary is authorized to require FHA mortgagees (both companies and individuals and officers) to obtain and maintain unique identifiers assigned by the Nationwide Mortgage Licensing System (NMLS). The Secretary may also require each mortgage insured under section 203 of the National Housing Act (12 U.S.C. 1709) to include an NMLS unique identifier, and any unique company identifier assigned by the NMLS.

As private sector lenders have scaled back their activities in the wake of the serious housing downturn that began two years ago, the FHA has significantly increased its share of the single-family mortgage market from less than 5 percent to more than 30 percent. With higher market share has come increased taxpayer exposure. Elevated levels of delinquencies and foreclosures across the nation have had a detrimental effect on the financial health of the FHA program. An independent actuarial report released on November 12, 2009, showed that the capital reserve ratio for the Mutual Mortgage Insurance Fund (MMIF) dropped below the Congressionally-mandated threshold of two percent to a less-than-expected 0.53 percent. The actuarial review also indicated that the economic value of the FHA declined over 75 percent from last year, to $2.73 billion. In light of these facts, it is essential that Congress enact reforms to ensure that a taxpayer bailout of the FHA will not be necessary.

The provisions in this bill represent an important step in providing HUD with the tools it needs to supervise and monitor the FHA program and assess risk. While we support this legislation, we believe that Congress and the Administration must be ever-vigilant in their oversight of this program to make certain that the program is adequately capitalized and is run in a safe and sound manner that protects the taxpayer from the need for another bailout. Finally, as the housing market begins to stabilize, we must look for ways to decrease reliance on Federal government guarantees and encourage the re-entry of private capital and investment in the mortgage market.

Spencer Bachus.
Randy Neugebauer.
Lynn Jenkins.
Gary G. Miller.
Jeb Hensarling.
Christopher Lee.
Shelley Moore Capito.
Scott Garrett.
Jim Gerlach.
Judy Biggert.
Kenny Marchant.
Thaddeus McCotter.