An independent actuarial report issued this week says the Federal Housing Administration's Mutual Mortgage Insurance Fund is in its strongest financial condition since at least 1989, when the first independent actuarial study was made.
"Homeownership in America continues to set records," said Secretary Martinez. "FHA is the federal government's largest program to promote homeownership, and this report shows that we can continue helping thousands of families to realize the American dream.
"This new study shows that FHA is working for America's families," Martinez said. "Very few programs can say they help millions of families realize the American dream without costing taxpayers a penny."
FHA mortgage insurance helps low- and moderate-income families become homeowners by protecting the mortgage company against loan default. This encourages the lender to make mortgage loans to borrowers who otherwise might not be able to meet conventional underwriting requirements.
The economic value of the MMI Fund rose by $1.5 billion over fiscal year 2000, to $18.5 billion. The economic value of the fund is defined as the sum of existing capital plus the present value of current insurance in force. This year's study, conducted by Deloitte & Touche, reported that the MMI Fund's capital adequacy ratio is 3.75 percent, well above the Congressionally mandated minimum of 2.0 percent.
The Secretary noted that the capital ratio increased even though the economy has been in a recession. "Housing has been the strongest sector of the economy, and has helped to moderate the economic problems of the last year," he said. He cautioned, however, that FHA claims typically are highest in the early stages of an economic recovery.
FHA now insures more than 6.6 million single-family mortgage loans with a total value of $499 billion. FHA does not make mortgage loans directly, but rather insures loans made by private lenders to homebuyers. The program is sustained entirely by borrower premiums. Since 1934 it has enabled almost 30 million American families who would otherwise be locked out of the mortgage market and homeownership to qualify for mortgages.
Read the Deloitte & Touche actuarial review