On Nov. 16, 2015, FHA released its Annual Report to Congress and the FY 2015 Independent Actuarial Assessment of the FHA Mutual Mortgage Insurance Fund. The review shows that the capital reserve ratio has reached 2.07 percent and has improved by more than $40 billion since FY 2012. The 50 basis points mortgage insurance premium reduction in January 2015 added to the solvency of the fund and added 75,000 borrowers with credit scores below 680. Improvements can also be attributed to improved risk management and loss mitigation efforts. Serious delinquency rates for the active portfolio are at a seven-year low and recoveries on dispositions have improved by 43 percent since 2011.
“I was elated to hear that FHA reached the 2% reserve requirement,” said Seth Task, immediate-past president of ACAR. “While we don’t expect immediate action by HUD, I am excited to see what decisions they make over the next 6 to 12 months. I think another reduction in mortgage insurance interest premiums will be inevitable and hopefully the removal of the life of the loan requirements for mortgage insurance on FHA loans.”
2015 NAR President Chris Polychron issued the following statement on behalf of NAR:
“NAR advocated strongly for cutting FHA annual mortgage insurance premiums, and those policies are now paying dividends for both taxpayers and homeowners,” said NAR President Chris Polychron, executive broker of 1st Choice Realty in Hot Springs, Arkansas. “Today’s announcement shows that the Mutual Mortgage Insurance Fund’s health has solidly improved, offering strong incentive for FHA to take further action to support homeownership in America.”
“NAR will continue to review the actuarial assessment, but we believe these results show a positive trajectory for the mortgage insurance fund and a clear path for FHA to remain above its federally-mandated 2 percent capital reserve ratio,” said Polychron. “We believe that as delinquencies continue to decline and home prices continue to rise, the MMI’s success will only continue. With that in mind, FHA should look in the very near term towards additional policy changes to encourage homeownership.”
– Referenced from a National Association of REALTORS (NAR) article by: SARAH C. YOUNG, MEGAN BOOTH, COLIN ALLEN#ACARMarketReport#AffiliateNews#ConsumerandCommunity