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GALANTE EXPRESSES CONCERNS WITH SENATE'S FHA SOLVENCY ACT The FHA Solvency pointed out that when FHA Act, authored by Sen. Tim did participate in risk-sharing "These new Johnson (D-South Dakota), in the 1980s, the endeavor "cost authorities will chairman of his chamber's the fund significant dollars." Banking Committee, and Sen. "We can look at it seriously better protect Mike Crapo (R-Idaho), the as we go down the road," taxpayers and hold Galante said, but she did committee's ranking member, lenders accountable warn the committee about has provisions to strengthen underwriting, make lenders when they break "unintended consequences" of more accountable, and such a model, adding that the the rules." strengthen the FHA's reverse GSEs faced challenges when mortgage program. they engaged in risk-sharing "Our bill will give the FHA the tools it needs during the recent housing crisis. to get back on stable footing and strengthen When faced with the question of whether a program important to many Americans," the FHA Solvency Act would deter the agency Johnson said. from needing to draw additional funds to remain During a hearing before the Senate Banking in the black, Galante said the bill won't affect Committee, Carol Galante, assistant secretary whether FHA draws funds this year but said it for HUD and commissioner of the Federal "will help FHA's long-term financial health." Housing Administration (FHA), expressed Within a week of Galante's testimony, the general approval for the Senate's proposed Senate Committee on Banking, Housing, and legislation. However, she did highlight a few Urban Affairs passed the FHA Solvency Act of concerns. 2013 (S. 1376) with a vote of 21-1. Galante praised the bill for allowing FHA The bill includes a number of bipartisan to seek indemnification from lenders when proposals from the committee intended to they do not follow appropriate guidelines and strengthen the FHA's financial situation, protect for permitting FHA to make changes to its taxpayers, and ensure qualified borrowers still Home Equity Conversion Mortgage (HECM) have access to credit. program. "This was a bipartisan effort from start to However, she asked the bill authors to finish," Johnson said. "The reforms we approved consider granting FHA more authority when today are the product of a lot of hard work from it comes to servicing. In particular, she asked members on both sides of the aisle," Johnson that the agency be allowed to transfer servicing said. of some loans to specialty servicers just as FHA helped save about 3 million jobs and commercial shops do. She also voiced an aversion "prevented a catastrophic collapse in home to the bill's demand for mandatory premium values," according to a statement from the bill's increases when FHA's capital reserve ratio dips two sponsors. "However, FHA loans made at below its required level. the height of the crisis suffered heavy losses, "While we share the committee's desire to and without Congressional action the agency's ensure that future FHA leadership takes the balance sheets will remain at risk," the press appropriate steps to protect the fund and satisfy release stated. the capital reserve ratio, as we have shown since Johnson and Crapo's act would raise the 2009, premiums are only one factor to consider Mutual Mortgage Insurance Fund's minimum in rebuilding that supplemental account," capital reserve ratio to 3 percent and require Galante said. evaluation of FHA premiums on an annual Furthermore, she added, "As written, the basis to ensure they cover risks and maintain language does not account for the impact minimum capital reserves. increased premiums themselves will have The act also calls on HUD to consolidate on access to credit, endorsement values, and lender guidelines and expand the amount of ultimately the health of the fund." damages FHA can seek from lenders. Lastly, Lastly, Galante expressed concern regarding the act gives authority to the HUD secretary to FHA's infrastructure and systems, which oversee FHA's reverse mortgage program with hinder the agency's "ability to manage risk input from the public. appropriately." "These new authorities will better protect When the topic of risk-sharing came up, taxpayers and hold lenders accountable when Galante told the committee that FHA has not they break the rules," according to the bill's engaged in risk-sharing much in the past. She sponsors. 56 SURVEY REVEALS 'AGGRESSIVE' TACTICS WORRIED BUYERS ARE WILLING TO USE Low inventory coupled with rising mortgage rates and home prices are leading prospective buyers to consider using "aggressive" tactics such as overbidding to obtain a home, according to a recent survey from Trulia. In order to secure the desired home, 25 percent of prospective buyers in the survey said they were willing to bid 1 to 5 percent above the seller's asking prices. "Although buying a home is still much cheaper than renting, it's a stressful time to be a homebuyer," said Jed Kolko, Trulia's chief economist. "Consumers are worried that mortgage rates and prices will keep rising before they buy, and many are willing to fight over the limited number of homes for sale." When it came to overbidding, younger buyers (aged 18 to 34) are more likely to use the strategy. According to Kolko, millennials are "more willing than their parents' generation to outbid, borrow, or make a personal plea to get the house they want." For example, another 9 percent of respondents said they were willing to bid 6 to 10 percent over the asking prices, while 12 percent of younger respondents said the same. Just 4 percent said they were willing to go 10 percent above the asking price, while 7 percent of younger respondents were willing to go to that length. Twenty-five percent of respondents also said they were willing to pay for the seller's closing costs to get the home they want, though for millennials, the share was 30 percent. Additionally, the survey showed 17 percent of buyers would write a personal letter to the seller, while 23 percent of millennials said the same. The survey, conducted by Harris Interactive, also examined top worries and found rising mortgage rates weighed on the minds of 41 percent of potential buyers. Another 37 percent cited rising home prices as the top concern, while 36 percent said they were worried about not finding a home for sale they would like. Other worries in the top five were concerns of not qualifying for a mortgage (30 percent) and competing with many other buyers (27 percent).

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