Earlier today, we released the Federal Housing Administration’s (FHA) Fiscal Year 2011 Report to Congress. This report gives the financial condition and fiscal outlook of FHA’s Mutual Mortgage Insurance (MMI) Fund. I am happy to say that even though FHA has come through the most severe economic crisis since it was created in 1934, the capital balance of the MMI Fund remains in positive territory and its programs are actuarially sound.
This is no accident. Thanks to the significant number of new risk management policies that the Obama Administration has put in place, as well as premium rate increases enacted over the past few years, we are creating a strong foundation for the recovery of FHA’s capital position as the economy begins to grow again.
As of the end of fiscal year 2011, FHA’s total capital resources stand at $33.7 billion. This is $400 million more than a year ago. For new endorsements during this last year alone, the actuaries’ project a profit of nearly $11 billion. This is nearly double the $5.7 billion in net receipts projected for that book just one year ago.
These results are the direct result of a three-part strategy:
- Systematic tightening of risk controls;
- Increased premiums to stabilize near-term finances and
- Expanded our use of loss mitigation workout assistance to avoid unnecessary claims
FHA will continue its historic mission, launched more than 77 years ago, to provide access to mortgage credit to low to moderate income borrowers while acting as a stabilizing force in the nation’s housing finance market. And we will remain vigilant in identifying and managing risks to the MMI Fund to ensure that FHA will continue to play its important role in our nation’s housing market.