MMI Fund capital reserve is now 5X larger than required

By BrokerOwner.net November 15, 2024 Housing News

The

U.S.
Department
of
Housing
and
Urban
Development
(HUD)
and
the

Federal
Housing
Administration
(FHA)
reported
a
solid
year
of
financial
performance
for
the
Mutual
Mortgage
Insurance
(MMI)
Fund,
covering
FHA’s
Title
II
Single
Family
Mortgage
Insurance
programs.

The
FHA’s
MMI
Fund
achieved
a
capital
reserve
ratio
of
11.47%
as
of
Sept.
30,
a
year-over-year
increase
of
roughly
0.9%
from

2023,
according
to

FHA’s
Annual
Report
to
Congress
released
on
Friday.
The
report
marked
the
ninth
consecutive
year
the
ratio
has
exceeded
its
2%
statutory
minimum.

The
performance
of
the
forward
book
of
business
posted
a
stand-alone
capital
ratio
of
10.88%,
another
slight
increase
of
0.68%
compared
to
a
year
ago.

“The
financial
performance
of
the
forward
mortgage
portfolio
remained
strong
this
past
fiscal
year,”
the
report
said.

FHA
also
detailed
that
the
percentage
of
first-time
homebuyers
using
FHA
insurance
was
82.64%
of
total
recorded
FHA
forward-mortgage
purchase
endorsements,
roughly
on
par
with
the
same
figure
in
2023.

This
is
despite
“numerous
challenges
in
the
mortgage
and
housing
markets
that
began
in
FY
2023
and
continued
during
the
majority
of
FY
2024,”
according
to
the
report.

The
total
figure
still
saw
a
slight
reduction
when
compared
to
2022’s
level
of
82.97%,
but
remains
solid
despite
industry-wide
challenges
faced
throughout
much
of
2023
and
2024.
In
the
announcement
of
the
report’s
publication,
FHA
emphasized
that
it
shows
more
than
790,000
Americans
were
supported
by
the
agency’s
homeownership
programs.

Adrianne
Todman,
the
head
of
HUD,
credited
the
work
of
the
Biden
administration
as
working
to
“have
expanded
access
to
homeownership,”
due
to
“historic
reforms
to
help
hundreds
of
thousands
of
Americans
buy
and
keep
a
home”
in
spite
of
ongoing
affordability
and
inventory
challenges.

“The
exceptional
team
of
public
servants
at
FHA
and
throughout
this
administration
continued
to
deliver
a
world-class
mortgage
program
to
support
the
nation’s
homebuyers
in
fiscal
year
2024,”
said
FHA
Commissioner

Julia
Gordon.

“Through
our
work,
we
have
demonstrated
that
FHA
can
facilitate
homeownership
and
wealth-building
opportunities
for
hundreds
of
thousands
of
households
and
provide
support
for
homeowners
facing
hardships
while
maintaining
a
financially
sound
Mutual
Mortgage
Insurance
Fund.”

The

Community
Home
Lenders
of
America
(CHLA)
lauded
the
Fund’s
performance
in
a
statement,
particularly
calling
out

the
cut
last
year
to
the
annual
mortgage
insurance
premium
(MIP).

“The
FHA
report
demonstrates
the
effectiveness
of
the
February
2023
cut
of
30
basis
points
in
annual
FHA
premiums,
and
we
reiterate
our
call
for
FHA
to
find
a
way
to
end
life
of
loan
premiums,
which
currently
overcharge
borrowers,”
the
group
said

Additionally,

Mortgage
Bankers
Association
(MBA)
president
and
CEO
Bob
Broeksmit
attributed
the
strength
of
the
Fund
to
“quality
underwriting
and
effective
risk
management
and
loss
mitigation
efforts
by
HUD,
FHA
lenders,
and
mortgage
servicers.”
But
the
association
and
its
membership
remain
concerned
about
affordability
given
the
continued
elevated
rate
environment.

“At
11.47%,
the
[MMI]
Fund
is
more
than
five
times
the
statutory
minimum
reserve
ratio,”
Broeksmit
said.
“While
it
is
sensible
to
have
a
healthy
cushion
above
the
2%
minimum
reserve,
qualified
borrowers
should
not
be
charged
higher
mortgage
insurance
premiums
(MIP)
than
necessary.”

Borrowers
could
experience
“meaningful
payment
relief
from
FHA
eliminating
its
life
of
loan
premium
requirement
and
making
another
reasonable
cut
to
the
MIP,”
Broeksmit
added.
Additionally,
more
“program
enhancements
to
boost
housing
supply
and
affordability”
would
be
beneficial,
holding
up

changes
to
the
203(k)
renovation
loan
program
this
year
as
an
example.

In
addition
to
pursuing
more
program
enhancements
to
boost
housing
supply
and
affordability,
such
as
this
year’s
203(k)
program
updates,
borrowers
would
see
meaningful
payment
relief
from
FHA
eliminating
its
life
of
loan
premium
requirement
and
making
another
reasonable
cut
to
the
MIP.