The Federal Home Administration, the leading public mortgage insurer, reported to Congress that its Mutual Mortgage Insurance Fund will return to its mandated capital levels more quickly than had been previously expected.

The agency, a division of the U.S. Department of Housing and Urban Development, called the MMI “the backbone” of its single family and reverse mortgage programs.

The FHA said the MMI's capital ratio stands at 0.24 but that it would return to its mandated capital level more quickly.

“As was the case last year, the new actuarial study shows that FHA is expected to sustain significant losses from loans insured prior to 2009, and thus its capital reserve remains below the congressionally mandated threshold of 2% of total insurance-in-force,” the agency said. “However, the actuaries' report concludes that, barring a further significant downturn in home prices, the MMI Fund will start to rebuild capital in 2012, and return to a level of 2% by 2014 – outpacing last year's prediction.”

Acting FHA Commissioner Carol Galante said, “In the midst of a tough housing market the FHA MMI Fund continues to be actuarially sound.

“Because of the Obama administration's strategy to protect the FHA Fund – tightening of risk controls, increased premiums to stabilize near-term finances and expanded loss mitigation assistance to avoid unnecessary claims – this past year's endorsements had the highest credit quality ever recorded and will yield historically high levels of net receipts in the years ahead.”

Instant Insights /

FHA Says Mortgage Insurance Fund Closer to Financial Health

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