The Federal Housing Administration (FHA) issued its annual report to Congress, offering insights about the financial health of the agency’s Mutual Mortgage Insurance Fund (MMI Fund) and other information about its policies and programs. Mortgage industry advocates responded, expressing optimism at the fund’s status while suggesting adjustments to make premiums more affordable.
The MMI Fund covers FHA’s Title II Single Family Mortgage Insurance programs for fiscal year (FY) 2024. According to the report, the agency’s insured portfolio held approximately 7.81 million single family forward mortgages and 287,000 Home Equity Conversion Mortgages (HECMs) at the end of the fiscal year.
The MMI Fund’s overall capital ratio increased 0.96 percentage points during that period to 11.47 percent as of Sept. 30, while the stand-alone capital ratio of its forward mortgage portfolio stood at 10.88 percent.
Federal Housing Commissioner and Assistant Secretary for Housing Julia Gordon framed the fund’s strong capital ratio as “a testament to the ability to facilitate significant change while successfully meeting our fiduciary responsibilities to the fund and the American taxpayer.”
“FHA has accomplished much during a time of great challenge for the nation’s homebuyers and homeowners, navigating first through the COVID-19 pandemic and then through a transitioning mortgage market featuring the dual challenges of significantly higher interest rates and limited housing supply,” Gordon said in a press release. “During this challenging time, FHA has continued to provide insurance to more than 3.9 million borrowers over the last four years, while helping more than 1.7 million struggling homeowners keep their homes through FHA loss mitigation home retention options since 2020.”
U.S. Department of Housing and Urban Development (HUD) Acting Secretary Adrianne Todman noted that, despite a challenging market, the FHA served more than 498,000 first-time homebuyers – 82.64 percent of total single family forward mortgage purchase endorsement volume.
“Similarly, FHA remained the leader by share of the market for mortgages supporting wealth-building for Black and Hispanic borrowers,” Todman said. “In 2023, FHA served nearly 2.5 times the number of Black borrowers, and almost two times the number of Hispanic borrowers by share of volume than other market participants.
“These are not just numbers or data points, these are people – real families – who deserve the opportunity to access programs designed to serve them when they need it most. FHA’s responsibility to the nation’s homeowners does not stop once they are in a home. Whether it is a loss of employment, the devastating impacts of natural disasters, or a reduction in wages, FHA’s work to offer both immediate and long-term mortgage payment relief has helped more than 592,000 struggling homeowners to keep their homes this past fiscal year alone, and over 1.7 million were able to stay in their homes since 2020.”
Additionally, the share of FHA-insured mortgages made to borrowers of color increased more than 1 percent to account for 31.66 percent of all forward mortgage insurance endorsements.
The FHA’s HECM portfolio stand-alone capital ratio stands at 24.5 percent, an increase of 7.78 percentage points from FY 2023.
FHA’s serious delinquency rate, as of Sept. 30, remained consistent with pre-pandemic levels at 4.15 percent, down 7.75 percentage points from its high of 11.9 percent in November 2020.
Mortgage Bankers Association (MBA) President and CEO Bob Broeksmit issued a statement attributing the FHA program’s health to quality underwriting, effective risk management and loss mitigation efforts by HUD and FHA lenders and mortgage servicers. He noted that MBA favors reducing the MMI Fund’s reserve ratio as a means of potentially reducing mortgage rates.
“With mortgage rates well above 6 percent, MBA and its members remain very concerned about the constrained affordability conditions for qualified first-time homebuyers and low- and moderate-income households,” Broeksmit said. “At 11.47 percent, the MMI Fund is more than five times the statutory minimum reserve ratio. While it is sensible to have a healthy cushion above the 2 percent minimum reserve, qualified borrowers should not be charged higher mortgage insurance premiums (MIP) than necessary. In addition to pursuing more program enhancements to boost housing supply and affordability, such as this year’s 203(k) program updates, borrowers would see meaningful payment relief from FHA eliminating its life of loan premium requirement and making another reasonable cut to the MIP.”
Broeksmit said MBA plans to review the report in greater detail and is looking forward to working with the Trump administration and Congress in 2025 on “policies and program enhancements to increase housing supply and lower costs for consumers while protecting taxpayers.”