FHA Report to Congress Shows Decline in Insurance Claims

The Federal Housing Administration (FHA) released its annual report to Congress last week on the financial status of its Mutual Mortgage Insurance (MMI) Fund — FHA’s principal insurance account that includes all single-family and reverse mortgage activity.  FHA’s study finds that since last year, the capital reserve ratio held steady, insurance claims declined significantly, and the economic value of FHA’s single-family insurance program grew by more than $1 billion, from $3.6 billion in 2009 to $4.7 billion in 2010.

Like last year’s report to Congress, the report shows that FHA is sustaining significant losses from loans insured prior to 2009 and its capital reserve ratio remains below the congressionally mandated threshold of two percent of all insurance-in-force. However, the report concludes that under conservative assumptions of future growth of home prices, and without any new policy actions, FHA’s capital ratio is expected to approach two percent in 2014 and exceed the statutory requirement in 2015.

Over this past year, FHA:

  • Served more than 1.75 million households by insuring $319 billion in single-family mortgages. This volume was second only to FY 2009.
  • Enabled 882,000 families to become homeowners for the first time. This represents one-third of all first-time buyers in the nation.
  • Helped more than 450,000 families avoid foreclosure through loss mitigation actions.
  • Helped 556,000 families to refinance their mortgage at lower interest rates, saving households an average of more than $140 per month.
  • Provided access to credit for close to 40 percent of purchase mortgages, including 60 percent of all African-American and Hispanic homebuyers.
  • Helped more than 450,000 families avoid foreclosure through loss mitigation actions.