House Passes and Sends to Reagan Bill Reviving FHA

A bill to revive the Federal Housing Administration, out of business since June 6 during the decade’s hottest housing market, received House approval Tuesday and was sent to President Reagan for his signature.

The measure, approved on a voice vote, extends the FHA’s statutory authority to insure low-down-payment mortgages until Sept. 30 and adds $9.5 billion to the agency’s credit ceiling of $74.4 billion. The agency reached its credit limit last week.

The House accepted changes in its FHA bill that were approved Monday by the Senate. The vote completes congressional action that had been delayed by a variety of procedural and political snags.

There was no word on when Reagan would sign the bill, but Silvio DeBartolomeis, the FHA’s acting chief, said the agency could resume operations by Thursday if the President did so promptly.

Because of the rush for FHA-insured mortgages, the extra $9.5 billion in credit authority will only enable the agency to continue operating through about July 25, DeBartolomeis said.

The extension measure, therefore, keeps some pressure on Reagan to sign the $1.7-billion supplemental appropriations bill that he has threatened to veto. That bill, which is still pending in Congress, also includes language reviving the FHA and raising its credit ceiling to $132 billion.

Since its statutory authority lapsed at midnight June 5, the FHA has not been able to make new commitments to insure mortgages. More than 400,000 applications for FHA mortgages have piled up, DeBartolomeis said.

The rush for FHA-insured mortgages, which were being underwritten at rates of 9.5%, began earlier this year when loan rates dropped below 10%. About 40% of the demand came from homeowners seeking to refinance older mortgages at today’s lower interest rates. The FHA’s credit ceiling was exhausted for the first time in the agency’s history in April, forcing Congress to enact emergency legislation to tide it over until earlier this month.

The agency’s statutory authority has expired six times in the last nine months, forcing the agency to shut down for more than a month.

FHA-insured mortgages are available to home buyers who do not have enough money for the 20% down payment traditionally required by lenders. They account for about 20% of the current mortgage market.