Through its single-family and multifamily mortgage insurance programs, the Federal Housing Administration (FHA), which is based within the U.S. Department of Housing and Urban Development, plays an indispensable role in financing affordable housing opportunities. FHA provides mortgage insurance for the purchase of single- and multifamily housing targeted to low and moderate-income families that insures lenders against losses in case of mortgage default, enabling private industry to construct and rehabilitate multifamily housing, single-family homes, and assisted living facilities for low and moderate-income families and individuals.
HFAs and FHA Insurance
State HFAs use FHA single-family mortgage insurance in combination with Mortgage Revenue Bonds (MRBs) and other funding sources to finance modestly priced homes for first-time homebuyers. In 2015, 61 percent of state HFA loans financed with MRBs were insured by FHA.
HFAs’ status as government entities automatically qualifies them to provide down payment assistance in connection with FHA-insured loans, a privilege not enjoyed by most private originators. Such assistance allows HFAs to assist creditworthy families who may not have the means to afford a large down payment. Maintaining HFAs’ authority to provide down payment and other secondary financing on a preferred basis with FHA single-family loans is one of NCSHA’s top Legislative, Business, and Regulatory priorities.
Future of FHA
During the recent economic crisis, FHA’s single-family mortgage portfolio experienced substantial losses. These losses were largely the result of adverse circumstances, not poor management or underwriting. At the same, FHA’s lending increased substantially as it played a countercyclical role in helping to boost the weakened housing market.
FHA loan performance has improved considerably in recent years — its serious delinquency rate has declined 50 percent since and is near a ten-year low — and its capital ratio has also returned to its statutory minimum level and is projected to remain there in the near future.
Some lawmakers and outside experts to push for reforms that would restrict FHA’s homeownership activities. NCSHA supports efforts to help FHA maintain its financial health, but cautions policymakers to be careful not to overreach and risk pricing the responsible low-and moderate income borrowers that FHA traditionally serves out of the housing market.
- To find local housing assistance, please contact your state’s Housing Finance Agency (HFA).
- To learn more about NCSHA’s advocacy work in this area or to attend a related education event, complete the general inquiry form.
- Members of the media, please contact Lisa Bowman, Director of Marketing and Communications, at email@example.com.
- July 26, 2018House Votes to Extend Federal Flood Insurance Program Through November 30
The U.S. House of Representatives yesterday voted to extend the authorization for the National Flood Insurance Program (NFIP) for four months through November 30.
- July 24, 2018Banking Committee Considers Ginnie Mae, HUD OIG Nominees
The Senate Banking Committee earlier today held a hearing to examine nominees for two key HUD positions: Michael Bright to serve as president of Ginnie Mae and Rae Oliver Davis to serve as HUD’s Inspector General (IG).
- June 28, 2018White House Proposes Federal Government Reorganization
The Trump Administration last week released a comprehensive plan for reorganizing the executive agencies of the federal government. It includes several provisions impacting federal housing and community development programs.
FHA Insurance - Resources
- June 14, 2017NCSHA Comments to HUD on Improving FHA’s Homeownership Programs
The Federal Housing Administration (FHA) plays an indispensable role in helping low-income families and other traditionally under-served populations achieve the dream of homeownership. FHA’s support for sustainable low down payment lending dovetails perfectly with HFAs’ affordable homeownership missions.