Bill Expands FHA Commitment Authority by $85bn

The House of Representatives on Wednesday passed a bill that would grant emergency funds to the Federal Housing Administration‘s (FHA) mortgage insurance commitment authority for fiscal year 2009, which ends in September. The bill, HR 3357, passed a 363-68 vote and expands FHA’s insurance authority 27% to $400bn from $315bn in order to cover an expected deficiency and to allow FHA to insure as many mortgages as are expected before the fiscal year-end. As of June 30, the FHA had endorsed $256bn of mortgages in the fiscal year to date, $59bn short of its current limit. With three months remaining in the FHA’s fiscal year and monthly volume over $30bn each month in the last few months, the FHA’s fund looks to run out before September. A US Department of Housing and Urban Development (HUD) spokesperson told HousingWire the FHA is required by law to notify Congress when it authorizes insurance up to 75% of its commitment authority. FHA notified Congress by letter on June 19 and asked for $85bn of additional authority. “The increased demand reflects the initial success of the President’s recovery program to both lower interest rates and to provide opportunities for many home owners to refinance their mortgages,” the spokesperson says. “The increased authority for the (mortgage insurance fund) is vital to the continued recovery of the nation’s housing market.” The bill also raises Ginnie Mae‘s securities guarantee authority to $400bn from $300bn and allocates capital to the highway and unemployment trust funds. Write to Diana Golobay.