Like many of you, I still believe that having the opportunity to own a home is very much part of the American dream. But after more than four years as your voice in Washington, I believe government involvement in that process has devolved into an American nightmare, particularly when it comes to the Federal Housing Administration (FHA) and government-backed enterprises such as Fannie Mae and Freddie Mac.

Through recent hearings held by the Financial Services Committee, on which I serve, it has become clear the FHA is facing some serious problems that ultimately could have a devastating effect on not only those families who have FHA-backed mortgages but all American taxpayers.

Historically, the FHA’s mission has been to help low-income and first-time home buyers who otherwise have good credit and the ability to repay a loan. However, FHA’s share of the new purchase mortgage market has jumped from just 4.5 percent in 2006 to an average of 29 percent per quarter.  And FHA has seen even greater growth in the mortgage insurance market, where its share today represents over 56 percent. What’s more startling is that each mortgage insured by FHA, more than 56 percent of mortgages in the nation, is guaranteed in full by FHA and, ultimately, U.S. taxpayers. If a borrower defaults on the loan, FHA reimburses the lender for 100 percent of the loan amount. Meanwhile, just six private companies are able to offer mortgage insurance, primarily because the rates offered by FHA are so low that the private market can’t compete. If you take a closer look at the rapid growth of FHA’s market share and the stipulations surrounding these mortgages, you’ll notice an alarming issue: FHA is not only exposing taxpayers to the risk of additional bailouts and displacing private-sector insurance, FHA is potentially harming those Americans it seeks to help. It is taking the place of Fannie Mae and Freddie Mac and making the same lending mistakes.

Meanwhile, with regard to the U.S. Department of Housing and Urban Development’s previous assurances regarding FHA’s health, the independent actuarial review of the FHA released last November found that the economic value of the FHA’s Mutual Mortgage Insurance Fund – the government fund that insures the FHA’s single-family mortgages – was negative $16.3 billion.

Edward Pinto, Resident Fellow at the American Enterprise Institute, recently testified before our committee about the impact of maintaining the status quo at the FHA: “Based on an analysis of the FHA’s FY 2009 and 2010 books of business, the FHA’s lending practices are inconsistent with its mission and represent a disservice to American working-class families and communities." Instead of helping creditworthy borrowers access the mortgage market, FHA grown so large that it now offers mortgages to individuals who have little or no down payment and low credit scores, and entices people who may not be prepared for the obligations of homeownership to buy a home. Like so many programs and agencies in Washington, FHA has run amuck. We need agencies like FHA to return to its traditional roles in the housing marketplace instead of dominating it and squashing private market competition and allowing American families to continue to overextend resources for a home that they ultimately cannot afford.

While our committee will continue to tackle these issues and work to correct some of the problems inherent in the FHA and government-backed housing system, we must continue to make clear that hard-working Americans like you should not continue to shell out more money while those receiving FHA loans are allowed to default multiple times on their loans. We have to maintain a balance between providing people with an opportunity for the American dream and forcing a fiscal nightmare onto all taxpayers. We are heading down a slippery slope, one we experienced with Fannie Mae and Freddie Mac. Our country cannot afford to repeat the mistakes of the all-to-recent and damaging past.