U.S. Sen. David Vitter, R-La., has introduced legislation requiring the Federal Housing Administration (FHA) to recapitalize its Mutual Mortgage Insurance Fund to its congressionally mandated 2% capital reserve ratio within two years.
Vitter's bill comes weeks after an audit report pegged the MMI fund's capital ratio at 0.24%.
‘The FHA has been violating the congressionally mandated ratio of capital they must keep in their mortgage insurance fund since 2009," Vitter said in a statement. "It is their responsibility to manage their funds responsibly and keep their books in order. There is no way FHA could operate like that if they were a private bank, and we need to hold them accountable."
Under Vitter's bill, the Housing and Urban Development secretary and the FHA commissioner would be mandated to use "all available methods under law" to recapitalize the fund within two years. Vitter's bill would also assess penalties if the fund fails to maintain 2% capital reserves and prohibit "secret bailouts of the FHA by the Treasury Department," according to a summary available on Vitter's website.
Eight other Republican senators have co-sponsored the legislation.