The Federal Housing Administration (FHA) released its 2017 Annual Report to Congress on the economic condition of the agency’s Mutual Mortgage Insurance Fund (MMI Fund). FHA reports that at the end Fiscal Year (FY) 2017, the MMI Fund had a total economic net worth of $25.6 billion and the Capital Ratio remains above the statutory minimum for a third straight year.
The MMI Fund supports FHA’s Single Family mortgage insurance programs, including all forward purchase and refinance transactions, as well as mortgages insured under the Home Equity Conversion Mortgage (HECM) or reverse mortgage program originated since FY 2009. While the MMI Fund remains above its minimum capital level, both the economic net worth and the capital ratio of the MMI Fund declined from levels reported last year. The Fund’s economic net worth fell $1.9 billion and the capital ratio declined from 2.35 to 2.09 percent from FY 2016.
This year’s report reflects a transition toward providing more transparency, consistency, and accountability, supporting FHA’s commitment to enhanced disclosure on the financial condition and sustainability of its Single Family mortgage insurance programs. For example, FHA is providing stand-alone capital ratios for its forward and reverse mortgage programs to better assess the impact of each on the MMI Fund. In addition, FHA is providing new data and analysis into the economic drivers impacting the performance of the MMI Fund, including stress-testing of the portfolio based on historical scenarios.
Key Highlight from Annual Report:
The Fund’s FY 2017 Capital Ratio is 2.09 percent, a decrease from 2.35 percent in FY 2016. This is the third consecutive year this ratio exceeded the statutory minimum of 2.00 percent.
The MMI Fund’s Economic Net Worth for FY 2017 is $25.6 billion, down from $27.6 billion for FY 2016. Economic Net Worth is comprised of Total Capital Resources of $39.7 billion and a negative Cash Flow NPV of $14.1 billion. Economic Net Worth declined by $1.9 billion from FY 2016.
FHA’s cumulative Insurance-in-Force (IIF) reached approximately $1.23 trillion at the end of FY 2017, an increase of 4.8 percent from FY 2016.
FHA endorsed 1,246,440 forward mortgages in FY 2017 (including 882,079 purchase loans) totaling $251 billion in Unpaid Principal Balance (UPB).
First-time homebuyers accounted for 725,102 or 82.2 percent of all FHA forward purchase loans.
The average loan amount of FHA-insured forward mortgages was $201,337.
The average borrower’s credit score was 676 compared to 680 in FY 2016.
To view the report, click here.