Last week, the Federal Housing Administration (FHA) announced that its Mutual Mortgage Insurance Fund (MMIF) was finally in the black at $4.8 billion, when it published its Annual Report to Congress, Regarding the Financial Status of the FHA Mutual Mortgage Fund.  FHA is a key player in the mortgage market today, providing nearly one-third of all housing credit.  The MMIF improvement marks a positive milestone for the US mortgage market on the road towards revitalizing private capital.

Just last year, the Treasury Department had to provide a $1.7 billion cash reserve draw to stabilize FHA’s finances.  In response to its Treasury draw, growing congressional criticism, and extremely strained resources, FHA undertook two years of policy reforms to improve its delinquency rates and recovery rates. In that time, FHA’s MMIF fund grew by $21 billion, and is now projected to grow another $40 billion over the next four years.

Unlike the cautious private players in the mortgage market, FHA does not intend to stay on the sidelines. FHA plans to dedicate its newly replenished resources to expanding housing credit to low- and middle-income families, minority communities and first-time homebuyers.  Any expansion of FHA credit during a healthy economy will help extend more private capital to consumers.



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