FHA Reports that the Mutual Mortgage Insurance (MMI) Fund is Financially Sound

The independent actuary report conducted annually and required by the National Housing Act, as indicated in the Annual Report to Congress regarding the financial status of the MMI (“Report”) executive summary reports that “the Mutual Mortgage Insurance Fund’s (‘MMIF,’ ‘MMI Fund’ or ‘Fund’) economic net worth is $27.6 billion. The Fund grew $3.8 billion during FY 2016. The increased net worth brings the Fund’s capital ratio to 2.32 percent, an increase from last year’s capital ratio of 2.07 percent. The Fund has fully recovered and remains above its 2 percent capital ratio. The MMI Fund economic net worth has improved by $43.9 billion since FY 2012 and the capital ratio improved by 3.8 percent.”

According to their 63 page Annual Report, FHA indicated “This year’s Economic Net Worth (‘ENW’) marks the fourth consecutive year that the MMI Fund has shown growth. All of the gains were due to improvements in the Single Family Forward portfolio. The economic net worth of the Forward portfolio increased by $18.3 billion leading to an overall MMI Fund net worth of $27.6 billion. In contrast, the value of the HECM portfolio deteriorated this year, decreasing $14.5 billion. The decline in the HECM portfolio is primarily the result of changes in HECM modeling assumptions. The HECM model was updated to include better estimates of the expenses and sales prices of defaulted HECM loans. Despite the decline in the HECM portfolio, the MMI Fund is strong. The four-year positive trend in the U.S. Department of Housing and Urban Development Financial Status of the FHA Mutual Mortgage Insurance Fund FY 2016 is the result of long-term credit strategies put into action since the start of this Administration. A few of the performance metrics that are consistent with the actuary’s findings are:
– Early Payment Delinquencies (‘EPD’) are at historic lows.
– Serious delinquencies are at a 10-year low.”