FHA Report Says Health of Mortgage Fund Improving
Earlier today, HUD released its 2016 Annual Report to Congress on the financial status of the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund (MMIF). The report finds that the value of the MMIF, which funds FHA’s single-family homeownership and reverse mortgage loans, grew by $3.8 billion to $27.6 billion in fiscal year (FY) 2016, its fourth consecutive annual increase.
The MMIF’s capital ratio is at 2.32 percent, up from 2.07 percent in FY 2015 and above the statutorily mandated capital ratio of 2 percent. The capital ratio fell below the 2 percent threshold in in FY2009, due mainly to losses related to the economic downturn, and did not climb back to the minimum ratio until FY 2015. In FYs 2012 and 2013, due to losses caused by the financial crisis, the MMIF ran a negative balance. In September 2013, HUD was forced to request funding from the U.S. Treasury to keep it actuarially solvent.
The increase in the MMIF’s value was driven largely by an $18.3 billion jump in the value of its single-family homeownership loans. These gains were offset by losses in HUD’s reverse mortgage portfolio, which the report attributes largely to changes in the model FHA uses to project the performance of the reverse mortgages it insures. The performance of FHA’s reverse mortgage portfolio has historically been more volatile than its homeownership portfolio.
FHA endorsed 1.2 million homeownership loans in FY 2016, 880,000 of which financed home purchases (the rest were refinancings). 82 percent of FHA’s home purchase loans went to first-time home buyers.
According to data from NCSHA’s Factbook, around 60 percent of HFA single-family program loans funded through mortgage revenue bonds (MRBs) in 2014 were insured by FHA.