Page 27 - BB_Dec_2018SMALL
P. 27
FHA Capital Reserves
Post Healthy Gain, But
HUD Signals No Sign
of a Premium Cut
The Federal Housing Administration (FHA)
today released its annual report to Congress
that shows the agency’s capital reserve ratio
grew by more than $8 billion in fiscal 2018 to a
total economic net worth of $34.86 billion.
In a sign that the housing recovery continues
to make gains, the independent actuarial
analysis shows that for the fourth straight
year, FHA’s reserve ratio of its Mutual
Mortgage Insurance Fund (Fund) has
exceeded the congressionally mandated 2%
threshold. The capital reserve ratio jumped
from an upwardly revised 2.18% in 2017 to
2.76% this year. “The financial health of FHA’s single-family
In an official statement, NAHB Chairman insurance fund is sound,” HUD Secretary
Randy Noel said: “The report clearly shows Ben Carson said in a press release. “FHA is
that actions instituted by HUD Secretary in good hands, guarding against excessive
Ben Carson and FHA Commissioner Brian risks, protecting the American taxpayer and
Montgomery to enhance the agency’s capital remaining true to our core mission to facilitate
reserves are showing positive results. It’s also safe and affordable mortgage options for
another indicator that FHA’s financial picture qualified borrowers.”
continues to brighten and should provide The Fund’s growth was fueled by the Single
momentum for the agency to consider a Family Forward Portfolio program, which
mortgage insurance premium reduction posted a capital ratio of 3.93% and a positive
to help first-time home buyers and young economic net worth of $46.8 billion. These
families seeking to enter the housing market.” gains were partially offset by losses in the
However, in a conference call with reporters, volatile reverse mortgage portfolio, which
FHA Commissioner Brian Montgomery posted a negative capital ratio of 18.83% and
indicated that despite the positive report, it was valued at minus $13.63 billion. Steps have
was still premature to consider a mortgage been taken to address the problems in the
insurance premium cut in the near term, since reverse mortgage portfolio, but they have
many factors go into such a decision other only recently taken effect.
than the overall health of the Fund. NAHB NOV 2018
27
DECEMBER 2018 | GREATER SAN ANTONIO BUILDERS ASSOCIATION
