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FHA 203k, Reverse Mortgage Funds Dry Up

GISRI funds probably available by Jan 31

December 9, 2003


The Federal Housing Administration (FHA) has run out of funding to endorse certain single-family loans insured under the General Insurance and Special Risk Insurance (GISRI) Fund program, said the Mortgage Bankers Association of America.

The shortage is the result of a Congress-passed continuing resolution, which provided FHA with only $3.8 billion in commitment authority for the GI/SRI fund, said MBA. It is likely that section 203(k) renovation loans, section 234(c) condominium-unit loans and Home Equity Conversion Mortgage reverse loans will continue to be accepted and processed in FHA Homeownership Centers. However, a Mortgage Insurance Certificate will probably be issued until funding is restored, which could be as late as Jan. 31.

A continuing resolution (CR) is "a joint resolution that provides funds to continue the operation of federal agencies and programs. Enacted shortly before or after the new fiscal year begins, the first continuing resolution usually makes funds available for a specified period; additional resolutions are often needed after the first expires," according to the U.S. House of Representatives' online glossary.

The MBA said the original CR passed by Congress in September intended to provide the U.S. Department of Housing and Urban Development (HUD), which FHA operates under, with one month's worth commitment authority to insure these loans. But, HUD was provided with two months' worth -- $3.8 billion, instead of $1.9 billion. When Congress passed subsequent CRs, the amount was not amended and it remains binding.

The group said it is working with HUD and Congress members to attempt the passage of a bill by Tuesday that would amend the CR and provide FHA with a prorated share of insurance funds -- approximately $9.5 billion -- through Jan. 31. Tuesday is the second and last day of this year that Congress will be in session for legislative business.

If this fails, another bill that could prevent GISRI funds from shutting down, if passed by Tuesday, is the HUD and Veterans' Affairs Appropriations bill, which has been on file since November. Both the House and the Senate would need to pass the bill by unanimous vote. But, the MBA pointed out that Senator Byrd, who says he is the top Democrat on the Committee of Appropriations, "wishes to have a roll-call vote on the bill, and, therefore, plans to object to passage of the bill by unanimous consent." Such action will leave the FHA short of insurance funds until Jan. 31.

Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.

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