The Federal Housing Administration today announced the results of its annual actuarial review of the Mutual Mortgage Insurance Fund, including the fund for the FHA’s Home Equity Conversion Mortgage program. The HECM program received a transfer of $535 million from the MMI capital reserve account in 2011 to meet shortfalls. However, the transfer is less than half of the $1.74 billion transferred last year, and FHA projects the HECM portion of the MMI fund to increase.
“Our projections indicate that, as of the end of FY 2011, the HECM portion of the MMI fund has sufficient capital resources to meet its future liabilities and hence will not require support from the overall fund,” the report states. “Expected improvements in house price growth rates and recent increases in mortgage insurance premiums contribute to a steadily increasing economic value of the MMI HECM portfolio from FY 2011 through FY 2018.”
The total economic value of the HECMs in the fund is projected to increase from $1.36 billion in FY 2011 to $10.03 billion in FY 2018.
“The increase in premiums and the HECM Saver both positively impacted FHA’s finances,” said Carol Galante, acting FHA commissioner during a press call on Tuesday. “Also, given additional guidance to lenders on property insurance default we expect to have a positive impact on the fund.”
Galante also noted the pending financial assessment of borrowers that one lender began implementing this week and others are working to put into play.
“We are also looking at longer term guidance with the financial assessment of borrowers that will come into play down the road.”
For the overall MMI Fund, Galante said FHA is working off most of its losses, and that a recent Wall Street Journal article indicating FHA’s financial troubles “got it wrong.”
“The quality of FHA’s business continues to improve significantly,” she said.
Download the report at HUD.gov.
Written by Elizabeth Ecker