The Senate Committee on Banking, Housing, and Urban Affairs held a hearing, “The FHA Solvency Act of 2013,” on July 24. Federal Housing Administration (FHA) Commissioner Carol Galante was the sole witness. The hearing was focused on the discussion draft of FHA reform legislation offered by both Committee Chair Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID). The bill, the FHA Solvency Act of 2013, includes many proposed changes that have been requested of Congress by FHA and HUD to stabilize FHA’s Mutual Mortgage Insurance (MMI) fund. The stability of the MMI fund, which suffered losses in the aftermath of the financial crisis and remains in uncertain condition, has been the subject of congressional scrutiny.In her testimony, Commissioner Galante highlighted changes FHA has requested and that are included in the draft legislation and said that there are other topics within the bill that warrant further discussion, including the portion of the bill related to capital restoration of the MMI Fund. Commissioner Galante said in her testimony, “despite many policy and organizational changes proposed in this bill there are a number of statutory constraints which FHA strongly feels limit our ability to manage risk appropriately and are having a negative impact on FHA’s fiscal health… For that reason, we would like to continue to explore with the Committee tools which can be leveraged to allow FHA to minimize risk to the Fund and taxpayers while continuing to serve consumers.”Both the Committee Chair and Ranking Member have indicated that the Committee will not consider broader housing finance reform until completing consideration of the FHA bill. The House housing finance reform legislation (H.R. 2767) also includes reforms to the FHA (see elsewhere in Memo). Ranking Member Crapo said in his opening statement, “The Chairman and I have indicated that upon the completion of Committee action on this bill, we plan to immediately turn our attention to broader housing finance reform legislation. It will be necessary to address many of the broader questions surrounding the scope and mission of the FHA as part of that effort.”An archived hearing webcast and all witness testimony are available at: http://1.usa.gov/18zwsga A copy of the draft legislation is available at: http://1.usa.gov/11RFFB1