Donovan urges risk-reduction at FHA

When Secretary of Housing and Urban Development Shaun Donovan appeared before the House Financial Services Committee to propose risk-reducing changes at the Federal Housing Administration, he made sure to note that encouraging the return of private investment in the mortgage market was still a priority, CNBC’s Diana Olick reported. Donovan proposed raising the minimum Fair Isaac Corporation, or FICO, score for new FHA borrowers, as well as the upfront cash and annual insurance premiums that risky borrowers would need to pay. He also proposed protecting the FHA against lenders who commit fraud or misrepresent borrower qualifications.