{ "id": "R42875", "type": "CRS Report", "typeId": "R", "number": "R42875", "active": true, "source": "CRSReports.Congress.gov, EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source_dir": "crsreports.congress.gov", "title": "FHA Single-Family Mortgage Insurance: Financial Status of the Mutual Mortgage Insurance Fund (MMI Fund) ", "retrieved": "2022-06-30T04:03:31.460943", "id": "R42875_19_2022-05-27", "formats": [ { "filename": "files/2022-05-27_R42875_64ff005be80fe940186c15fcc49d8bb673908e11.pdf", "format": "PDF", "url": "https://crsreports.congress.gov/product/pdf/R/R42875/19", "sha1": "64ff005be80fe940186c15fcc49d8bb673908e11" }, { "format": "HTML", "filename": "files/2022-05-27_R42875_64ff005be80fe940186c15fcc49d8bb673908e11.html" } ], "date": "2022-05-27", "summary": null, "source": "CRSReports.Congress.gov", "typeId": "R", "active": true, "sourceLink": "https://crsreports.congress.gov/product/details?prodcode=R42875", "type": "CRS Report" }, { "source_dir": "crsreports.congress.gov", "title": "FHA Single-Family Mortgage Insurance: Financial Status of the Mutual Mortgage Insurance Fund (MMI Fund) ", "retrieved": "2022-06-30T04:03:31.460429", "id": "R42875_18_2021-02-23", "formats": [ { "filename": "files/2021-02-23_R42875_78b9eaf4ca0ee133cd7c3193843ecae8b157d117.pdf", "format": "PDF", "url": "https://crsreports.congress.gov/product/pdf/R/R42875/18", "sha1": "78b9eaf4ca0ee133cd7c3193843ecae8b157d117" }, { "format": "HTML", "filename": "files/2021-02-23_R42875_78b9eaf4ca0ee133cd7c3193843ecae8b157d117.html" } ], "date": "2021-02-23", "summary": null, "source": "CRSReports.Congress.gov", "typeId": "R", "active": true, "sourceLink": "https://crsreports.congress.gov/product/details?prodcode=R42875", "type": "CRS Report" }, { "source": "EveryCRSReport.com", "id": 593656, "date": "2019-03-04", "retrieved": "2019-12-20T19:49:51.367416", "title": "FHA Single-Family Mortgage Insurance: Financial Status of the Mutual Mortgage Insurance Fund (MMI Fund)", "summary": "The Federal Housing Administration (FHA) insures private lenders against losses on home mortgages that meet certain eligibility criteria. If the mortgage borrower defaults (that is, does not repay the mortgage as promised) and the home goes to foreclosure, FHA pays the lender the remaining principal amount owed. By insuring lenders against the possibility of borrower default, FHA is intended to expand access to mortgage credit to some households who might not otherwise be able to obtain affordable mortgages, such as those with small down payments. \nWhen an FHA-insured mortgage goes to foreclosure, the lender files a claim with FHA for the remaining amount owed on the mortgage. Claims on FHA-insured home mortgages are paid out of the Mutual Mortgage Insurance Fund (MMI Fund), which is funded through fees paid by borrowers (called premiums), rather than through appropriations. However, like all federal credit programs covered by the Federal Credit Reform Act of 1990, FHA can draw on permanent and indefinite budget authority with the U.S. Treasury to cover unanticipated increases in the cost of the loans that it insures, if necessary, without additional congressional action. \nEach year, as part of the annual budget process, the expected costs of mortgages insured in past years are re-estimated to take into account updated information on loan performance and economic assumptions. If the anticipated costs of insured mortgages have increased, then FHA must transfer funds from a secondary reserve account into its primary reserve account to cover the amount of the increase in the anticipated cost of insured loans. If there are not enough funds in the secondary reserve account, then the MMI Fund is required to take funds from Treasury using its permanent and indefinite budget authority in order to make the required transfer. \nSeparately from the budget re-estimates, FHA is required by law to obtain an independent actuarial review of the MMI Fund each year. This review provides a view of the MMI Fund\u2019s financial status by estimating the MMI Fund\u2019s economic value\u2014that is, the amount of funds that the MMI Fund currently has on hand plus the net present value of all of the expected future cash flows on the mortgages that are currently insured under the MMI Fund. The actuarial review is used to determine whether the MMI Fund is in compliance with a statutory requirement to maintain a capital ratio of at least 2%. The capital ratio is the economic value of the MMI Fund divided by the total dollar amount of mortgages insured under the MMI Fund. \nIn the years following the housing and mortgage market turmoil that began around 2007, increased foreclosure rates, as well as economic factors such as falling house prices, contributed to increases in expected losses on FHA-insured loans. This put pressure on the MMI Fund and reduced the amount of resources that FHA had available to pay for additional, unexpected future losses. The capital ratio fell below 2% in FY2009 and remained below 2% for several years thereafter, turning negative in FY2012 and FY2013. Concerns about FHA\u2019s finances culminated at the end of FY2013, when FHA announced that it would need $1.7 billion from Treasury to cover an increase in anticipated costs of insured loans. This marked the first time that FHA needed funds from Treasury to make the required transfer of funds between the primary and secondary reserve accounts.\nMore recently, the financial position of the MMI Fund has improved. The capital ratio again exceeded the 2% threshold in FY2015 and has remained above 2% in the years since. The FY2018 actuarial review of the MMI Fund estimated the economic value of the MMI Fund to be positive $34.9 billion and the capital ratio to be 2.76%. This suggests that the MMI Fund would have about $34.9 billion remaining after realizing all of its expected future cash flows on currently insured mortgages. The FY2018 results represent an increase from FY2017, when the capital ratio was estimated to be 2.18% and the economic value was estimated to be $26.7 billion.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/R42875", "sha1": "1488df8a09d9e1ca1c2c1418c05aac56605f2b61", "filename": "files/20190304_R42875_1488df8a09d9e1ca1c2c1418c05aac56605f2b61.html", "images": { "/products/Getimages/?directory=R/html/R42875_files&id=/0.png": "files/20190304_R42875_images_ead06dcce654188259056aada070d6fc7f26084c.png" } }, { "format": "PDF", "encoding": null, "url": "https://www.crs.gov/Reports/pdf/R42875", "sha1": "b27bffeccaee57d4f9259d248f931ce19eb26f90", "filename": "files/20190304_R42875_b27bffeccaee57d4f9259d248f931ce19eb26f90.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4918, "name": "Homeownership & Housing Finance" } ] }, { "source": "EveryCRSReport.com", "id": 581852, "date": "2018-06-11", "retrieved": "2018-06-13T22:11:49.778849", "title": "FHA Single-Family Mortgage Insurance: Financial Status of the Mutual Mortgage Insurance Fund (MMI Fund)", "summary": "The Federal Housing Administration (FHA) insures private lenders against losses on home mortgages that meet certain eligibility criteria. If the mortgage borrower defaults (that is, does not repay the mortgage as promised) and the home goes to foreclosure, FHA pays the lender the remaining principal amount owed. By insuring lenders against the possibility of borrower default, FHA is intended to expand access to mortgage credit to some households who might not otherwise be able to obtain affordable mortgages, such as those with small down payments. \nWhen an FHA-insured mortgage goes to foreclosure, the lender files a claim with FHA for the remaining amount owed on the mortgage. Claims on FHA-insured home mortgages are paid out of the Mutual Mortgage Insurance Fund (MMI Fund), which is funded through fees paid by borrowers (called premiums), rather than through appropriations. However, like all federal credit programs covered by the Federal Credit Reform Act of 1990, FHA can draw on permanent and indefinite budget authority with the U.S. Treasury to cover unanticipated increases in the cost of the loans that it insures, if necessary, without additional congressional action. \nEach year, as part of the annual budget process, the expected costs of mortgages insured in past years are re-estimated to take into account updated information on loan performance and economic assumptions. If the anticipated costs of insured mortgages have increased, then FHA must transfer funds from a secondary reserve account into its primary reserve account to cover the amount of the increase in the anticipated cost of insured loans. If there are not enough funds in the secondary reserve account, then the MMI Fund is required to take funds from Treasury using its permanent and indefinite budget authority in order to make the required transfer. \nSeparately from the budget re-estimates, FHA is required by law to obtain an independent actuarial review of the MMI Fund each year. This review provides a view of the MMI Fund\u2019s financial status by estimating the MMI Fund\u2019s economic value\u2014that is, the amount of funds that the MMI Fund currently has on hand plus the net present value of all of the expected future cash flows on the mortgages that are currently insured under the MMI Fund. The actuarial review is used to determine whether the MMI Fund is in compliance with a statutory requirement to maintain a capital ratio of at least 2%. The capital ratio is the economic value of the MMI Fund divided by the total dollar amount of mortgages insured under the MMI Fund. \nIn the years following the housing and mortgage market turmoil that began around 2007, increased foreclosure rates, as well as economic factors such as falling house prices, contributed to increases in expected losses on FHA-insured loans. This put pressure on the MMI Fund and reduced the amount of resources that FHA had available to pay for additional, unexpected future losses. The capital ratio fell below 2% in FY2009 and remained below 2% for several years thereafter, turning negative in FY2012 and FY2013. Concerns about FHA\u2019s finances culminated at the end of FY2013, when FHA announced that it would need $1.7 billion from Treasury to cover an increase in anticipated costs of insured loans. This marked the first time that FHA needed funds from Treasury to make the required transfer of funds between the primary and secondary reserve accounts.\nMore recently, the financial position of the MMI Fund has improved. The capital ratio again exceeded the 2% threshold in FY2015 and has remained above 2% in FY2016 and FY2017. The FY2017 actuarial review of the MMI Fund estimated the economic value of the MMI Fund to be positive $25.6 billion and the capital ratio to be 2.09%. This suggests that the MMI Fund would have about $25.6 billion remaining after realizing all of its expected future cash flows on currently insured mortgages. Although the capital ratio remained above 2% in FY2017, the results represent a decrease from FY2016, when the capital ratio was estimated to be over 2.30% and the economic value was estimated to be $27.6 billion.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R42875", "sha1": "26bb10a08b59f78a9feb7d2e2a45e95f0bb096b1", "filename": "files/20180611_R42875_26bb10a08b59f78a9feb7d2e2a45e95f0bb096b1.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R42875", "sha1": "6cf26413535c2c916f6bf8e010cf254a10c3f333", "filename": "files/20180611_R42875_6cf26413535c2c916f6bf8e010cf254a10c3f333.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4918, "name": "Homeownership & Housing Finance" } ] }, { "source": "EveryCRSReport.com", "id": 457630, "date": "2016-12-13", "retrieved": "2016-12-22T16:32:23.656847", "title": "FHA Single-Family Mortgage Insurance: Financial Status of the Mutual Mortgage Insurance Fund (MMI Fund)", "summary": "The Federal Housing Administration (FHA) insures private lenders against losses on home mortgages made to borrowers that meet certain eligibility criteria. If the borrower defaults\u2014that is, does not repay the mortgage as promised\u2014and the home goes to foreclosure, FHA pays the lender the remaining principal amount owed. By insuring lenders against the possibility of borrower default, FHA is intended to expand access to mortgage credit to households who might not otherwise be able to obtain a mortgage at an affordable interest rate or at all, such as those with small down payments. \nWhen an FHA-insured mortgage goes to foreclosure, the lender files a claim with FHA for the remaining amount owed on the mortgage. Claims on FHA-insured home mortgages are paid out of the Mutual Mortgage Insurance Fund (MMI Fund), which is funded through fees paid by borrowers (called premiums), rather than through appropriations. However, like all federal credit programs covered by the Federal Credit Reform Act of 1990, FHA can draw on permanent and indefinite budget authority with the U.S. Treasury to cover unanticipated increases in the cost of the loans that it insures, if necessary, without additional congressional action. \nEach year, as part of the annual budget process, the expected costs of mortgages insured in past years are re-estimated to take into account updated performance and economic assumptions. If the anticipated costs of insured mortgages have increased, then FHA must transfer funds from a secondary reserve account into its primary reserve account to cover the amount of the increase in the anticipated cost of insured loans. If there are not enough funds in the secondary reserve account, then the MMI Fund is required to take funds from Treasury using its permanent and indefinite budget authority in order to make the required transfer. \nSeparately from the budget re-estimates, FHA is required by law to obtain an independent actuarial review of the MMI Fund each year. This review provides a view of the MMI Fund\u2019s financial status by estimating the MMI Fund\u2019s economic value\u2014that is, the amount of funds that the MMI Fund currently has on hand plus the net present value of all of the expected future cash flows on the mortgages that are currently insured under the MMI Fund. The actuarial review also determines whether the MMI Fund is in compliance with a statutory requirement to maintain a capital ratio of at least 2%. The capital ratio is the economic value of the MMI Fund divided by the total dollar amount of mortgages insured under the MMI Fund. \nIn the years following the housing and mortgage market turmoil that began around 2007, increased foreclosure rates, as well as economic factors such as falling house prices, contributed to an increase in expected losses on FHA-insured loans. This increase in expected losses put pressure on the MMI Fund and reduced the amount of resources that FHA had available to pay for additional, unexpected future losses. The capital ratio fell below 2% in FY2009 and remained below 2% for several years thereafter, turning negative in FY2012 and FY2013. Concerns about FHA\u2019s finances culminated at the end of FY2013, when FHA announced that it would need $1.7 billion from Treasury to cover an increase in anticipated costs of loan guarantees. This marked the first time that FHA needed funds from Treasury to make the required transfer of funds between the primary and secondary reserve accounts.\nMore recently, the MMI Fund has been showing improvement, and the capital ratio once again exceeded the 2% threshold in FY2015. The FY2016 annual actuarial review of the MMI Fund, released in November 2016, estimated the economic value of the MMI Fund to be positive $27.6 billion and the capital ratio to be 2.32%. This suggests that the MMI Fund would have about $27.6 billion remaining after realizing all of its expected future cash flows on currently insured mortgages. The results represent an increase of $3.7 billion from FY2015, when the economic value was estimated to be $23.8 billion and the capital ratio was estimated to be 2.07%.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R42875", "sha1": "878dae7f4325461c4b14411d6fea50ea2b43f4ed", "filename": "files/20161213_R42875_878dae7f4325461c4b14411d6fea50ea2b43f4ed.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R42875", "sha1": "7ba09bf0d602249100524c6f59c3b17bb343f546", "filename": "files/20161213_R42875_7ba09bf0d602249100524c6f59c3b17bb343f546.pdf", "images": null } ], "topics": [ { "source": "IBCList", "id": 4918, "name": "Homeownership & Housing Finance" } ] }, { "source": "EveryCRSReport.com", "id": 448071, "date": "2015-12-17", "retrieved": "2016-04-06T17:42:48.288664", "title": "FHA Single-Family Mortgage Insurance: Financial Status of the Mutual Mortgage Insurance Fund (MMI Fund)", "summary": "The Federal Housing Administration (FHA) insures private lenders against losses on home mortgages made to borrowers that meet certain eligibility criteria. If the borrower defaults\u2014that is, does not repay the mortgage as promised\u2014and the home goes to foreclosure, FHA pays the lender the remaining principal amount owed. By insuring lenders against the possibility of borrower default, FHA is intended to expand access to mortgage credit to households who might not otherwise be able to obtain a mortgage at an affordable interest rate or at all, such as those with small down payments. \nWhen an FHA-insured mortgage goes to foreclosure, the lender files a claim with FHA for the remaining amount owed on the mortgage. Claims on FHA-insured home mortgages are paid out of the Mutual Mortgage Insurance Fund (MMI Fund), which is funded through fees paid by borrowers (called premiums), rather than through appropriations. However, like all federal credit programs covered by the Federal Credit Reform Act of 1990, FHA can draw on permanent and indefinite budget authority with the U.S. Treasury to cover unanticipated increases in the cost of the loans that it insures, if necessary, without additional congressional action. \nEach year, as part of the annual budget process, the expected costs of mortgages insured in past years are re-estimated to take into account updated performance and economic assumptions. If the anticipated costs of insured mortgages have increased, then FHA must transfer funds from a secondary reserve account into its primary reserve account to cover the amount of the increase in the anticipated cost of insured loans. If there are not enough funds in the secondary reserve account, then the MMI Fund is required to take funds from Treasury using its permanent and indefinite budget authority in order to make the required transfer. \nSeparately from the budget re-estimates, FHA is required by law to obtain an independent actuarial review of the MMI Fund each year. This review provides a view of the MMI Fund\u2019s financial status by estimating the MMI Fund\u2019s economic value\u2014that is, the amount of funds that the MMI Fund currently has on hand plus the net present value of all of the expected future cash flows on the mortgages that are currently insured under the MMI Fund. The actuarial review also determines whether the MMI Fund is in compliance with a statutory requirement to maintain a capital ratio of at least 2%. The capital ratio is the economic value of the MMI Fund divided by the total dollar amount of mortgages insured under the MMI Fund. \nIn recent years, increased foreclosure rates, as well as economic factors such as falling house prices, contributed to an increase in expected losses on FHA-insured loans. This increase in expected losses put pressure on the MMI Fund and reduced the amount of resources that FHA has on hand to pay for additional, unexpected future losses. The capital ratio fell below 2% in FY2009 and remained below 2% for several years thereafter, turning negative in FY2012 and FY2013, before again exceeding the 2% threshold in FY2015. Concerns about FHA\u2019s finances culminated at the end of FY2013, when FHA announced that it would need $1.7 billion from Treasury to cover an increase in anticipated costs of loan guarantees. This marked the first time that FHA needed funds from Treasury to make the required transfer of funds between the primary and secondary reserve accounts.\nThe FY2015 annual actuarial review of the MMI Fund, released in November 2015, estimated the economic value of the MMI Fund to be positive $23.8 billion and the capital ratio to be 2.07%. This suggests that the MMI Fund would have about $23.8 billion remaining after realizing all of its expected future cash flows on currently insured mortgages. The results represent an increase of $19 billion from FY2014, when the economic value was estimated to be $4.8 billion and the capital ratio was estimated to be 0.41%.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R42875", "sha1": "38cb947d7ed88aa2254b0a3011efbcd9e4e28f10", "filename": "files/20151217_R42875_38cb947d7ed88aa2254b0a3011efbcd9e4e28f10.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R42875", "sha1": "9debbc8fea9403b551b942b6dca43bad62662e9e", "filename": "files/20151217_R42875_9debbc8fea9403b551b942b6dca43bad62662e9e.pdf", "images": null } ], "topics": [ { "source": "IBCList", "id": 4306, "name": "Homeownership Assistance" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc809690/", "id": "R42875_2015Jan26", "date": "2015-01-26", "retrieved": "2016-03-19T13:57:26", "title": "FHA Single-Family Mortgage Insurance: Financial Status of the Mutual Mortgage Insurance Fund (MMI Fund)", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20150126_R42875_1a14f78006f71fd494ec6c329e01841dd701fe09.pdf" }, { "format": "HTML", "filename": "files/20150126_R42875_1a14f78006f71fd494ec6c329e01841dd701fe09.html" } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc819284/", "id": "R42875_2012Dec21", "date": "2012-12-21", "retrieved": "2016-03-19T13:57:26", "title": "The FHA Single-Family Mortgage Insurance Program: Financial Status and Related Current Issues", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20121221_R42875_06615dc5cef5ae53704bb49c4dbbdb038ac536eb.pdf" }, { "format": "HTML", "filename": "files/20121221_R42875_06615dc5cef5ae53704bb49c4dbbdb038ac536eb.html" } ], "topics": [] } ], "topics": [ "Domestic Social Policy" ] }