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FHA at ground zero of ideological battle

Commentary: Watch for legislation aimed at scaling FHA back to irrelevance

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There's a battle getting under way on Capitol Hill that could affect the ability of hundreds of thousands of first-time and moderate-income families to buy a home with a low down payment. It's a fight over the nearly 80-year mission of the Federal Housing Administration to support homebuying by people who are otherwise cut out by the conventional marketplace. Their credit doesn't quite make the grade; they don't have a lot of cash; and they can't jump through the underwriting hoops required by the big banks. On one side you have the major housing and mortgage lending lobbies -- NAR, the homebuilders and mortgage bankers -- who want to preserve the core purposes and essence of the Federal Housing Administration's home mortgage insurance program and strengthen it administratively. They see FHA's surge in market share during the housing bust years -- from less than 3 percent in 2005 to more than 25 percent in 2010 -- as having been crucial to hundreds of thousands of home purchases that...