The Federal Housing Administration (FHA) has released its 2018 Annual Report to Congress on the economic condition of the agency's Mutual Mortgage Insurance Fund (MMI Fund). The FHA reports that at the end of Fiscal Year (FY) 2018, the MMI Fund had a total Economic Net Worth of $34.8 billion and a Capital Reserve Ratio that remains above the statutory minimum for a fourth consecutive year.
The MMI Fund supports FHA’s single-family mortgage insurance programs, including all forward mortgage purchase and refinance transactions, as well as mortgages insured under the Home Equity Conversion Mortgage (HECM), or reverse mortgage program. While the value of FHA’s forward mortgage portfolio is growing, the latest independent actuarial report finds the value of the agency’s reverse mortgage portfolio continues to decline, representing a continuing economic drain on the MMI Fund from books of business in 2018 and earlier.
This year’s report continues to offer greater transparency, consistency and accountability in the economic fundamentals of the MMI Fund. For the second consecutive year, FHA is providing separate stand-alone capital ratios for its forward and reverse mortgage portfolios to better assess the impact of each on the MMI Fund. For a second year, the report also includes stress-testing of the portfolio based on historical scenarios.
FHA’s 2018 Annual Report also includes important technical revisions to last year’s report that reflect adjustments to the MMI Fund’s Capital Ratio and Economic Net Worth for FY 2017.
KEY HIGHLIGHTS FROM FHA'S 2018 ANNUAL REPORT
The MMI Fund’s FY 2018 Capital Ratio is 2.76 percent, a 0.58 percentage point increase over the restated FY 2017 Capital Ratio of 2.18 percent. This is the fourth consecutive year this ratio exceeded the statutory minimum of 2.00 percent.
The MMI Fund’s overall Economic Net Worth for FY 2018 is $34.86 billion, an increase of over 8 billion from FY 2017. Economic Net Worth is comprised of Total Capital Resources of $49.24 billion and a negative Cash Flow NPV of -$14.38 billion. FHA’s cumulative Insurance-in-Force (IIF) reached $1.26 trillion of Unpaid Principal Balance (UPB) at the end of FY 2018, largely unchanged from FY 2017.
FHA endorsed over one million forward mortgages in FY 2018 (including 776,284 purchase loans) totaling $209 billion in UPB.
First-time homebuyers accounted for 641,921 or 82.7 percent of all FHA forward purchase loans.
Minority homebuyers accounted for 33.8 percent of all FHA forward purchase loans.
The average loan amount of FHA-insured forward mortgages was $206,041.
The average borrower's credit score was 670 compared to 676 in FY 2017.
To view the report, please click here.