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The U.S. Department of Housing & Urban Development (HUD) has released its annual report to Congress on the financial condition of the Federal Housing Administration’s Mutual Mortgage Insurance (MMI) Fund. The independent actuarial analysis shows the MMI Fund’s capital ratio grew by $3.8 billion and now stands at 2.32 percent—the second consecutive year since 2008 that FHA’s reserve ratio exceeded the congressionally required two percent threshold.
“FHA and its leadership should be commended for the steps they have taken to improve the value of the FHA MMI fund for single family mortgages since the economic crisis, at the same time they have provided access to homeownership for hundreds of thousands of low and moderate income Americans,” said David H. Stevens, CMB, president and CEO of the Mortgage Bankers Association (MBA). “The core strength of FHA’s forward book of business is representative of growing stability of the housing market nationally.”
This is the fourth consecutive year of economic growth for the MMI Fund, allowing FHA to expand credit access to qualified borrowers even as the broader housing market continues to recover. FHA’s MMIF is responsible for paying lenders if a mortgagor defaults. In a sign of continuing health, the report shows that the fund’s “seriously delinquent” rate is at a ten-year low, while the overall economic value of the fund has increased by $3.8 billion.
“FHA’s strong, sustained progress has helped fuel the housing market recovery over the past eight years,” said HUD Secretary Julian Castro. “Today’s report once again confirms that our steps to maintain a financially sound Fund are paying off, giving more American families the opportunity to afford a home of their own.”
“FHA has come a long way since our housing crisis,” said Ed Golding, HUD’s Principal Deputy Assistant Secretary for Housing. “With evidence that FHA’s fundamentals are strong and improving, there is no doubt that FHA is making steady progress accumulating capital and, at the same time, improving access to credit for working families.”
Major findings of FHA’s Annual Report:
►The MMI Fund’s capital ratio is above Congress’ two percent requirement for the second consecutive year, standing at 2.32 percent, a 12 percent increase in the capital ratio and marks the fourth consecutive year that the net worth of the Fund has improved.
►The economic value of the MMI Fund gained $3.8 billion in Fiscal Year 2016 and is now valued at $27.6 billion.
►The Single Family Forward Portfolio gained $18.3 billion in value, outperforming the actuary’s projections by $10.1 billion and achieved a capital ratio of 3.28 percent.
“FHA’s actuarial report shows that the fund has indisputably found its footing,” said NAR President William E. Brown, a Realtor from Alamo, California and founder of Investment Properties. “That’s good news for taxpayers, and a reflection of FHA’s sound stewardship. It’s clear from this report that FHA can continue taking responsible steps to manage their risk even as they take action to make homeownership more affordable for lower- and middle-income buyers.”