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There are some, Mr. Chairman, who recommend a return to some form of

coinsurance. Coinsurance failed. Through February, 1992, claims paid on coinsured

loans totalled over $1.5 billion. In addition, in 1991 a $3.7 billion reserve was established for future losses on the old coinsurance business. We do not intend to return to any form of a discredited system that delegated decision making to the coinsurer, but retained for HUD the ultimate responsibility for covering all losses the program incurred. That is an unacceptable risk.

We will be pleased to work with all interested parties to see how existing programs can work better to address our nation's affordable housing needs. For example, we have met with various industry groups (including representatives from the National Council of State Housing Agencies) and with both Fannie Mae and Freddie Mac on several occasions to explore initiatives related to credit enhancements in the area of multifamily housing finance and the concept of a standard mortgage underwriting process for multifamily projects. Under no circumstances will we resurrect the failures of the past and repackage them, however, we look forward to continuing our ongoing discussions with the industry on new initiatives which have the potential for being beneficial to all parties involved.

Mr. Chairman, the Department is sensitive to the claim that single and multifamily insurance programs of FHA are not fulfilling their respective missions. Let us assure the subcommittee that Secretary Kemp remains fully committed to the goal of expanding homeownership and affordable housing opportunities, and the FHA insurance programs are critical to our meeting that goal. At the same time, it must be clearly understood

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that increased housing production is not the sole purpose of FHA, nor is it the primary purpose of FHA to stimulate the recovery of the private sector housing market.

Mr. Chairman, we have an absolute responsibility to promote the important goals of expanding opportunities for affordable housing which Congress helped establish, but the programs that accomplish those objectives must be operated responsibly and on a sound financial basis, and in the context of a broad effort -- involving both the public and private sectors to create an economic climate which creates both growth and

opportunity.

Further, it should also be clearly understood that FHA's role in expanding opportunities for decent, safe and affordable low- and moderate-income housing does not stop with its insurance programs. Its role also includes enabling the families who benefit directly from HUD's partnership with the private sector to have opportunities for resident management and homeownership, and assuring that insured and HUD-held multifamily properties provide safe and adequate housing. We insist that those who stand to benefit from the government's commitment to affordable low-income housing be held accountable for their obligations to serve the interests of residents of multifamily housing developments. In short, the Department takes seriously its role not only as a partner in the development of new multifamily housing, but also its role in ensuring that the existing low-income housing stock is preserved and maintained for the benefit of the low-income families that we have a responsibility to serve.

In conclusion, Mr. Chairman, the insurance programs of FHA -- both single and multifamily -- are part of a diverse public and private sector marketplace which provides

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support for homebuyers and housing markets across the United States, and which makes mortgage credit available from a wide range of sources. We believe that these programs

of FHA, after their extensive reform and restructuring, are an important part of that marketplace, and indeed, are better able now than before to serve the long-term housing needs of low- and moderate-income Americans.