The Federal Housing Administration should be modernized and given the flexibility to insure refinancing products for at-risk borrowers, Federal Reserve Board governor Randall S. Kroszner testified to Congress yesterday.

“FHA modernization and [government-sponsored enterprise] reform are needed to address the ongoing shortcomings of current mortgage-oriented government initiatives,” Kroszner said, according to prepared text of the testimony released by the Fed. “In addition, the GSEs should be strongly encouraged to raise additional capital so that they can fulfill the expanded role that the Congress has recently extended to them.”

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