The Federal Housing Administration (FHA) released its annual report to Congress 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, this accounting 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 2% 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 2% in 2014 and exceed the statutory requirement in 2015.
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