FHA Commissioner Carol Galante testified before the House Financial Services Committee last week. Her testimony focused on the critical role that FHA has been taking in the housing recovery. She also acknowledged FHA's financial woes, and explained the variety of things FHA has been doing to stabilize the Fund.
On Jan. 1, 2013, the National Flood Insurance Program (NFIP) began phasing out the rate subsidies for the vast majority of older properties. The 2012 Biggert-Waters law (which extended the NFIP for 5 years) requires that subsidized rates increase in steps of 25% per year until the affected owners are paying the full cost for flood insurance. Passage of this law was essential to ensure that all properties, including second/vacation homes, would continue to have access to comprehensive coverage under the NFIP.
FHA has played a critical role in our nation’s economy in the last 5 years, a role it was exactly designed to fill. FHA has provided safe, affordable access to mortgage credit in a time when the private market abandoned housing finance. Instead, FHA stepped in during our housing crisis, and provided access to mortgage credit to millions of Americans who wanted to purchase homes.