FHA and Congress discuss how to fix housing crisis

Today the House Financial Services committee held a full hearing on “Using the FHA (Federal Housing Administration) for Housing Stabilization and Homeownership Retention” to discuss possible solutions to the current mortgage and foreclosure crisis.

Rep. Spencer Bachus (R-AL) said the Bear Stearns intervention has set a standard for this type of government aid and has caused homeowners who “behaved responsibly” by not taking on more debts than they could afford to suffer by paying more taxes for aid programs. He and many other representatives expressed concern that a possibility for aid in paying off loans and mortgages would decrease incentive to for individuals to pay them independently.

Other representatives argued that government intervention is necessary. Rep. Gene Green (D-TX) said that although America worries about a recession, there are many people who because of this crisis are already living in a depression.

When asked if service companies make money on foreclosures, Housing and Urban Development assistant secretary and FHA commissioner Brian Montgomery said that they take no taxpayer funds except to pay salaries and similar expenses.