Industry leaders express support for Senate's FHA plan

David Stevens, president and CEO of the Mortgage Bankers Association (MBA), said the measure contains "common-sense reforms" that will help the agency deal with a potential $1 billion shortfall in its insurance fund.

"As we continue to analyze the bill, we may suggest some fine-tuning of specific provisions," Stevens said.

"We support the direction of this legislation and look forward to working with the chairman and ranking member as the committee considers their proposal in the coming days and weeks."

Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking member Mike Crapo (R-Idaho) released a discussion draft on Monday that strengthens underwriting standards, improves lender accountability measures and overhauls the agency's reverse mortgage program.

The FHA, created nearly 80 years ago, has run into financial struggles caused by the failure of bad loans made during the period around the financial crisis.

Johnson has said his committee would take up an FHA bill first before moving on to a measure that would overhaul mortgage giants Fannie Mae and Freddie Mac.

Several GOP members of the House Financial Services Committee last week released a discussion draft that would deal with both issues together and would require the FHA to become a self-sustaining entity, most likely within about two years of enactment of a measure.

The FHA has already taken some recommended steps to mitigate its losses. But the Johnson-Crapo would provide more flexibility to bolster its balance sheet and protect taxpayers from having to step in with a bailout, the lawmakers said.