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Researchers Argue for Lower FHA Premiums

Wednesday, January 7, 2015

In mid-November the Federal Housing Administration (FHA) announced that its Mutual Mortgage Insurance Fund (MMI) had returned to solvency.  The fund, damaged by the collapse in housing prices and skyrocketing delinquencies caused by a number of factors, had fallen below the Congressional mandated requirement that it maintain capital reserves representing 2 percent of its outstanding mortgage guarantees. 

In a previous article, we noted "The Department of Housing and Urban Development (HUD) said on Monday that the Fund has gained nearly $6 billion in value over the last year and now stands at $4.8 billion with a capital ratio of .41 percent.  One year ago that ratio was a negative .11 percent."  The funds recovery meant that, while it was still a ways from its required position, it no longer needed to seek funds from the U.S. Treasury as had been expected.


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