Congress Approves FHA Commitment Authority and Insurance Premium Increases; Prevents Disruptions to Title I Program

On August 4, prior to leaving for a month-long August recess, the Senate adopted legislation (HR 5872) increasing the commitment authority of the Federal Housing Administration’s (FHA) General Insurance and Special Risk Insurance (GI/SRI) Fund from $15 billion to $20 billion for FY2010. The House approved the measure on July 28. The President is expected to sign the bill.

In June, Federal Housing Commissioner David Stevens notified leaders of the House and Senate Appropriations Committees that reported loan guarantee commitments within the GI/SRI fund exceeded $11.25 billion. The agency was approaching the fund’s commitment limitation of $15 billion and legislative authority was needed to exceed that limitation and prevent a disruption of service.

Stevens indicated an increase of $5 billion was needed to ensure FHA would be able to honor commitments through the end of September 2010. The administration’s budget proposal also contains an increase in commitment authority to $20 billion for FY2011.

The GI/SRI Fund provides insurance for a variety of FHA loan programs, including the Title I program. Without the increased commitment authority, FHA estimated that it would have reached the currently enacted limitation of $15 billion for the fund sometime in August and been forced to shut down all programs supported by the GI/SRI Fund. Click here for more information.

Also on August 4, the Senate adopted legislation (HR 5981) giving FHA flexibility to raise mortgage insurance premiums. The House adopted the bill on July 30 and the President is expected to sign the measure into law.

The bill provides FHA the authority to increase mortgage insurance premiums from 0.55 percent to 1.55 percent. An increase in loan volume has diminished FHA capital reserves below the two percent threshold mandated by Congress. The premium increase allows FHA to increase reserves. In an audit on the performance of its loan portfolio released to Congress earlier this week, FHA indicated it had $3.6 billion in excess cash reserves or about 0.53 percent of all outstanding single-family home loans insured by the agency.

A recent notice from FHA Commissioner David Stevens indicated that the premium increase would add $300 million per month to the Mutual Mortgage Insurance (MMI) Fund. Click here for additional information on the premium increase.

For more information, contact MHI Vice President of Government Affairs Jason Boehlert at

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