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pression of the similar deficiencies, and then those that accoladed during wartime, and the similar situation right after the war with respect to doubling, tripling, quadrupling of families, as is occurring now, even in our day and time.

I am disappointed that we have not been able to obtain any kind of interim statistics as we discussed during the mark-up of the conference last year as to just what would be the registered differences this first quarter of this year with respect to FHA and the picture represented by the failures, foreclosures, and the like.

There was quite a bit of a scare, reports that we received during those deliberations in furtherance of adopting one of the options given by the Price Waterhouse analysis. That report was based on assumptions from a track experience of 1980-1985. We may have an audit now that we didn't have before in the last administration, but we don't have the interim reports we used to receive.

We used to take those for granted. But, of course, like other aspects of our activities, we were all enjoying the merry-go-round of those days. But all I can tell you is that this meeting today should not be relegated to a pro forma appearance of the Assistant Secretary. I am disappointed the Secretary himself couldn't be here, because I think that it would have been helpful just merely by his presence to have stressed and underlined the importance of this hearing. I think that at this point there is a way we can gauge the Congressional intent: As clearly as we could muster language to do so in the conference report and in the final product known as the National Affordable Housing Act of 1990, would be the Congressional intent.

Through rule implementation, I began to see the manifestations; we had a fight for 8 years with the previous administration where the clear intent of Congress was subverted through the attempted promulgation of rules and regulations in obvious and in distinct, and in clear and premeditated intent to circumvent the congressional intent.

When we debated, and the House overwhelmingly approved the so-called Ridge-Vento amendment, it clearly went on record as to what it wanted as far as FHA as a program, and the intended beneficiaries for the program. Now it is not in keeping with the jurisdiction of today's hearings, but I am also beginning to be very troubled with what I see coming out with section 102, and an attempt through rules and promulgation of regulations to make that incidental to something else, rather than the intended 102 target.

So with that, let me proceed to recognize Mrs. Roukema.
Mrs. ROUKEMA. Thank you, Mr. Chairman.

In the interests of time I am not going to go into my whole statement. I will put it in the record. We will be having a vote here shortly on a rule, and then I will want to be excused to participate in the floor debate. So I am going to refrain from taking up more time now.

I think we all know that the issues are before us here today. It seems as though we are in way revisiting some of the same controversies that we went through at the time that we wrote the legislation, and I am not implying in any way, in fact I commend Secretary Kemp for his progress thus far.

I am not implying in any way that it has been a lack of leadership, and I do believe that perhaps it is too early to expect anything more substantial than we have presently before us. I want to commend the Secretary and the Department for the progress thus far.

At the same time I will say that I see that we are having another problem with our friends in the industry, and I do use the words "friends” advisedly. I think just because we see differently on some of these aspects doesn't mean that our friendship is breached. But I must say that I hope that this is a substantive difference in the perspective on regulations, and not an industry attempt to reverse the work that we did last year. Because I think it was a very well devised package, and I see no problem that cannot be overcome, if we want to be consistent in our commitment to the spirit and the law, the letter of the law as we passed it last year.

Mr. Chairman, with that I yield back the balance of my time.

[The prepared statement of Hon. Marge Roukema can be found in the appendix.]

Chairman GONZALEZ. Mr. Vento, do you have a brief statement?

Mr. VENTO. Mr. Chairman, I would like to put a statement on the record. Thank you, Chairman Gonzalez, for holding the hearing to bring the subcommittee up to date on the status of the Mutual Mortgage Insurance Fund for the FHA. I also want to thank the witnesses today. I am concerned about the continued reports of regulatory excesses at the FHA. While I am well aware of the need to regulate risk, I do not believe that HUD should strangle the program in its zeal to control the risk.

Although not a supporter of the conference agreement on the FHA last year, I was on that conference and participated, I am well aware of what the agreement entailed. The bottom line was the increased cash up front at closing. I understand the need to shore up the Mutual Mortgage Insurance Fund. I do not understand attempts to require additional burdens of 57 percent closing costs, financial limitation on top of the statutory equity requirements added last year to the loan to value ratio. It is as if they are taking a double bite after coming to an agreement, Mr. Chairman.

In light of that, I will carefully evaluate the testimony today. I hope it is a misunderstanding about the applicability of it, but the end result is that 43 and 43 makes 86 where I come from, Mr. Chairman, and that is only 14 percent less than what they had sought, which is well in excess of what had been proposed in the conference. So after changing the loan-to-value ratio requirements, now they are requiring another aspect. I might say that this whole program begins to look suspiciously like the demise of the FHA program, which has been a key component of home ownership in so many of the districts across the country.

It may not be as important in some, but it surely is important in many of our districts. And I hope that we can work through this and develop an understanding so we will not see this type of excess of costs being bourne, I think inappropriately and against the expressed consent and agreement that occurred in the conference last year.

I might also say, I am distressed that we can't get adequate and timely information, as the chairman has pointed out. Here we are, normally we have the 1990 report 2 months after. We have a 1989 report which I suspect has just been delivered to us which normally should have been available by March 1, or historically it had been available March 1, 1990. But we are getting it delivered today; we don't have the 1990 report. And I think that this suggests to me, unless there are some unusual problems, that this is an effort to shield information from the Congress, and not a willingness to share.

So I intend to pursue some questions along these lines, as well as the models that are being used and modified in making the assessments and policy decisions, Mr. Chairman.

Thank you.

Chairman GONZALEZ. Thank you very much. Unless another member wishes to-Mr. Wylie.

Mr. WYLIE. I have a brief opening statement. I promise to take no more than 2 minutes, Mr. Chairman, if you please.

Mr. Chairman, I want to welcome Mr. DelliBovi, Mr. Weicher and Mr. Hill to our hearing today, but especially want to say that I look forward to hearing their testimony with reference to the FHA Mutual Mortgage Insurance Fund. I share your strong belief in the need for a healthy and viable Federal mortgage insurance program.

When last year Secretary Kemp reported to Congress that the FHA MMI Fund was losing money at an alarming rate, I think we in Congress took what I regarded at the time as prompt and effective action. The final provisions adopted in the Cranston-Gonzalez National Affordable Housing Act represented an important compromise. The FHA reform provision was intended to ensure that FHA maintains actuarial soundness, while not unduly preventing families from using the FHA program. In 1989 audited FHA reports indicated that the MMI Fund did not improve in 1989 and I think it would be premature for us to consider substantial changes to the FHA reforms that we made last year.

I would say the implementation of the statutory FHA reform should be judiciously considered. The Banking Committee has received the proposed regulations implementing the National Affordable Housing Act reforms to the MMI Fund, and it would appear to me, Mr. Chairman, that there are several important issues raised by these proposed regulations, which I hope are receptive to bipartisan agreement as a possible solution.

But I am anxious to hear from our administration friends, as I know you are, and I thank you for holding this hearing and look forward to the testimony.

[The prepared statement of Hon. Chalmers P. Wylie can be found in the appendix.]

Chairman GONZALEZ. Unless any member wishes to have some preliminary remarks

Mr. THOMAS. If I may. Very briefly, I just want to point out that you all have sat through this, and it is a new one to me, but I am very much interested in it. More than half of the homes in Wyoming are involved with the FHA program, and of course we are all interested in home ownership. We don't want to make it more difficult, on the other hand, if the mortgage fund is losing money. Today I would like to learn how in fact the insurance fund is perThank you.

forming, if the funds are losing money. I want to know more about the model that was used to study the insurance fund; does the model consider the numerous policy changes in the mid-1980's?

Certainly, I want to be assured that the proposals made by the Department are necessary and will not place additional burdens on the FHA qualified buyers. So I look forward to your testimony.

[The prepared statement of the Hon. Craig Thomas can be found in the appendix.]

Chairman GONZALEZ. Mr. Cox.

Mr. Cox. I have a very brief statement I would like to just submit for the record and I look forward to hearing what the witnesses have to say here today.

I thank you.

Chairman GONZALEZ. Without objection, your statement will be entered into the record at this point.

[The prepared statement of Hon. John Cox can be found in the appendix.]

Chairman GONZALEZ. I will also ask that our colleague, Mr. Torres, be permitted to place in the record at this point his opening statement, and without objection, it is so ordered.

[The information referred to can be found in the appendix.]

[The prepared statement of Hon. Mary Rose Oakar can be found in the appendix.]

Chairman GONZALEZ. Mr. Secretary DelliBovi, as grateful as I am that you are here--and I don't want to downgrade your presence by any stretch of the imagination by what I said earlier-but what I said earlier I mean. Secretary Kemp was very, very outspoken last year. I had several meetings with him. I offered a compromise package, and the one thing he resisted was the section that would have compelled him and given him the privilege-if he reported to Congress—of making whatever recommendations in the desire to protect the soundness of the Fund, once given an opportunity to measure what, if anything, was the trend, and if the alarming reports of the previous year and the year before that were attenuating or not, and I had that proviso, because I thought that there was no way that Congress—this is something we have to delegate to the administrative branch.

But be that as it may, it wasn't accepted, and I felt at the time that serious consideration should have been given to that, because I felt, as I do today, that those of us here are not knowledgeable enough to tell you that the thrust of your recommended rules changes are in the right direction or whether they mean that the main purpose of FHA since the beginning or ab initio, as they say in law, were being abdicated or not. We do know that FHA continues to be a vital program. We do know that the economic statistics reveal a continuing pressure on our economy, and that in turn bounces back and forth.

So I felt that the presence of the Secretary would be very important, even though maybe it wasn't adequate notice. But we appreciate you being here and your assistance, because I think that you are in a position to, at least at this point, answer or attempt to answer some of the questions we will be directing. So I want to thank you for having given us your prepared text earlier in time for us to have read it and reviewed it as I have, and knowing full well that this afternoon we would have one, maybe two procedural votes, but would still be enough to give us the bulk of the afternoon to proceed and hear you.

I felt that we ought to clearly indicate that this is just the initial step. We are going to have to continue oversight if we are going to be true to our charge here on this side. Now, it may be best if at this point we allow the members to go and register their vote and come back as soon as possible. I think this is the vote on the rule. And then being that our distinguished minority leader, Mrs. Roukema is heavily involved in the legislation that will be coming up after the rule is adopted, we will understand if she has to be present on the floor in debating.

But I hope the rest of us will be able to come back within 10 minutes.

[Recess.]

Chairman GONZALEZ. The subcommittee will continue. I have been asked to offer for the record, madam reporter, a written statement, a brief statement by Congressman Craig Thomas, and also a submission by Congresswoman Mary Rose Dakar for the record, preceding Mr. DelliBovi's testimony.

Well, Mr. Secretary, some of the members are on their way back; some are going to give their statements in writing down there for the ongoing debate this afternoon the gun bill, so you may proceed as you see best.

STATEMENT OF ALFRED A. DELLIBOVI, DEPUTY SECRETARY,

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, ACCOMPANIED BY ARTHUR J. HILL, ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER, AND JOHN C. WEICHER, ASSISTANT SECRETARY FOR POLICY DEVELOP. MENT AND RESEARCH

Mr. DELLIBovi. Chairman Gonzalez and members of the subcommittee, thank you for this opportunity to address the financial status of the Federal Housing Administration's Mutual Mortgage Insurance Fund, as well as the Department's efforts to implement the FHA reform provision contained in the National Affordable Housing Act of 1990.

Secretary Kemp regrets that a prior commitment in the scheduling on a relatively short notice of this subcommittee hearing prevents his being here today. I am accompanied, however, by Arthur J. Hill, the Assistant Secretary for Housing and Federal Housing Commissioner, as well as John C. Weicher, HUD's Assistant Secretary for Policy Development and Research. Both of these gentlemen were intimately involved last year in the negotiations and the development of the legislation, which was approved and became the National Affordable Housing Act of 1990. They have been closely monitoring the FHA since the beginning of this administration when they joined the Kemp team.

Let me point out, Mr. Chairman, that we have a great concern for the FHA. We recognized by the statements that the members of this subcommittee have made that it is a concern that is shared by the members of the subcommittee.

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