WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) today 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 2 percent threshold.
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. Read FHA’s Annual Report to Congress.
“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. This is 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.
The FHA’s Role in the Housing Market
The FHA was established in response to the failure of the banking system during the Great Depression to help stabilize the economy and the housing market. When the private market couldn’t or wouldn’t provide access to credit, FHA was there, investing in our economy and preserving pathways to the middle class – just as it was designed to do. During this most recent crisis, FHA provided critical access to credit when most needed. Today, FHA continues to support the housing recovery. the number of single-family loan endorsements has declined to pre-crisis levels. The decline in the number of FHA-insured single-family loan endorsements indicates the housing market and economy are beginning to recover.
Since 1934, FHA helped more than 46 million Americans purchase or refinance homes—nearly seven million of those just during the most recent crisis.