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From Banking and Finance Law Daily, July 18, 2013

Vitter seeks answers concerning internal FHA report projecting significantly greater losses than previously estimated

By Charles A. Menke, J.D.

Sen. David Vitter (R-La) has sent a letter to Federal Housing Commissioner Carol Galante requesting information relating to a “secret” report conducted by the Federal Housing Administration (FHA). The report, which the FHA has not made public, revealed that the FHA’s projected losses would be close to twice as much as what the FHA previously estimated.

In November of last year, the FHA was estimated to have losses of $65.4 billion. The new, unpublished report conducted using annual Federal Reserve Board tests shows losses could be as much as $115 billion. The FHA has refused to release this “stress test” report.

“[T]he news of a secret ‘stress test’ — hidden from both Congress and the American people — is extremely disconcerting,” Vitter said. “American tax-payers deserve to know their real risk in backing this massive, risky government program. I’m asking FHA to come clean about the results, since it’s clear that they’ve been misleading us.”

In addition to seeking the report itself, Vitter has requested that Commissioner Galante provide the following information by July 29, 2013:

  • the reasons why the report was not disclosed;
  • the identity of any individuals responsible for keeping the report secret; and
  • when the Commissioner became aware of the report and any action taken as a result.

LegislativeActivity: Mortgages

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