The House Committee on Financial Services held a hearing entitled “The Federal Housing Administration (FHA): Implications of a $1.7 Billion Taxpayer Bailout” on October 29 with FHA Commissioner Carol Galante testifying regarding the downturn in the Mutual Mortgage Insurance (MMI) Fund reserves. The Committee issued a memorandum on October 24 in advance of the hearing, summarizing the role of the FHA, the MMI fund, and HUD’s recent request for one-time funding to restore the fund’s capital reserve ratio to the statutory level of 2%. The capital reserve ratio fell below the reserve level in FY09 but HUD expected to be able to restore it through internal funding. In FY12, the reserve level fell to -1.44% due in part to higher incidences of default, particularly in the Home Equity Conversion Mortgage (HECM) portfolio. HUD requested an infusion of $1.7 billion in September to lift the reserve funding ratio level. Ms. Galante said that the Administration’s request for $1.7 billion in reserve funding does not indicate a decline in the health of the FHA or the MMI fund. She reported that FHA “has over $48 billion in its financing account.” She also noted that since the reserve fund ratio was last calculated in February 2013, the fund has been making “steady improvements.” These improvements are the result of steps the Administration has taken since 2009 in response to the great recession. Ms. Galante expects that the next FY14 estimates for the MMI fund will reflect the improvements HUD has made.In recent fiscal years, Congress has relied upon receipts from HUD, including those from the FHA MMI fund, to supplement the annual appropriation for the HUD budget. HUD has not modified its estimates of the receipts that could be applied to the HUD budget in FY14, as the Administration contends that the MMI fund is in healthy condition. View the Committee memo at: http://1.usa.gov/19Z9y2X View Ms. Galante’s testimony at: http://1.usa.gov/HlCnNc