After last year’s actuarial report on the financial health of the Federal Housing Administration’s Mutual Mortgage Insurance Fund, the Department of Housing and Urban Development is seeking a second opinion, the agency said in its quarterly report to Congress.
The FHA may be in need of a nearly $1 billion taxpayer bailout, housing officials announced in April after the agency’s annual actuarial report showed the Fund had a negative economic value of $16.3 billion. The FHA’s reverse mortgage portfolio was in the red with losses of $5.2 billion, contributing to the Fund’s $943 million shortfall.
The fiscal year 2012 report, released last November, was prepared by the Integrated Financial Engineering Group.
For the next report, Summit Consulting, LLC and Milliman, Inc. have been hired to provide “an additional independent analysis” of the MMI Fund’s financial health, the FHA disclosed in the foreword of its third quarter report for fiscal year 2013.
“This second assessment will provide another view of the health of the MMI Fund, giving HUD a new independent analysis and a second actuarial model,” said Frank Vetrano, FHA deputy assistant secretary of risk management and regulatory affairs, in the report to Congress. “This will enable FHA to view the MMI Fund through another lens, informing future policy decisions, as the agency continues work to develop more sophisticated and refined internal capabilities.”
MMI Fund balances at the end of fiscal year 2013’s third quarter were $33.1 billion, according to the report, a decline of $3 billion from the previous quarter.
The FHA is hopeful an alternate opinion will be useful.
“I believe that a second independent view of the Fund’s expected value will provide valuable insights and look forward to making these findings available to you later this year,” Vetrano said.
Written by Alyssa Gerace