FHA Fund Hits 2% Reserve Target

Filed in Housing Finance by on November 16, 2015 1 Comment

155329299The Federal Housing Administration today released its annual report to Congress that shows the agency’s capital reserve ratio has reached the minimum congressional threshold for the first time since 2008.

The report shows the FHA Mutual Mortgage Insurance Fund gained $19 billion in value over the past year, rising from $4.8 billion in September 2014 to $23.8 billion at the end of September. The agency’s capital ratio rose from 0.41% to 2.07%, just above the 2% minimum mandated by law.

This result is very encouraging. Last year, when FHA’s balance sheet moved back into the black for the first time since 2011, the agency predicted its capital ratio would not hit 2% until 2016.

FHA experienced strong growth in volume following the 50 basis point reduction in the annual mortgage insurance premium in January.  According to HUD Secretary Julian Castro, “Today’s report demonstrates that we struck the right balance in responsibly growing the fund, reducing premiums, and doing what FHA was born to do – allowing hardworking Americans to become home owners and spurring growth in the housing market as well as the broader economy.”

Commenting on the report, NAHB Chairman Tom Woods said: “This upward trend is another indicator that the housing recovery continues to move forward and that FHA’s financial picture continues to brighten. This report should provide momentum for the agency to take additional steps to expand credit opportunities for first-time home buyers and young families seeking to enter the housing market.”

View a comprehensive summary of the report.

For more information, contact Steve Linville at 800-368-5242 x8597.

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  1. At first I was alarmed wondering why it dropped to that target, only to learn it increased almost 5x to finally reach that target. Amazing that they were allowed to operate for nearly 7 years below the congressional minimum!

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