Health of FHA MMI Fund Has Improved Dramatically, Driven by Rising Home Prices


The health of the Federal Housing Administration (FHA) Mutual Mortgage Insurance Fund (MMI) continued to improve in 2021, according to the U.S. Department of Housing and Urban Development’s (HUD) fiscal year (FY) 2021 report to Congress.

The fund’s overall capital ratio for fiscal 2021 was 8.03%, an increase of 1.93 percentage points compared with a capital ratio of 6.10% in fiscal 2020.

The capital ratio is one indicator of the MMI fund’s financial health and includes both the FHA-insured single family forward and reverse mortgage portfolios.

Helping to strengthen the fund was an improvement in the HECM reverse mortgage program, which for the first time since 2015 has a strong positive ratio, primarily due to home price appreciation.

As of September 30, the FHA’s reverse mortgage portfolio had a stand-alone capital ratio of 6.08%, compared with a capital ratio of negative 0.78% in fiscal 2020.

“As the recovery from the pandemic continues, the fund remains well positioned to withstand future economic events and endure the outcomes from the pandemic induced delinquencies that remain in forbearance or are seriously delinquent,” HUD says in a release.

Marcia L. Fudge, secretary for HUD, says the strength of the MMI fund “is a promising sign and solidifies the important role FHA fulfills in making homeownership a reality for first-time homebuyers and those with lower incomes.”

“This year, our administration took unprecedented steps to deliver relief to those devastated by the pandemic,” Fudge says. “Managing the strong fiscal health and performance of the FHA program is a top priority, and I am encouraged to see the MMI fund remain resilient through the events of the past year. Looking ahead, we will ensure FHA is well positioned to provide broad and equitable access to homeownership, especially for those who have been historically underserved in the mortgage market.”

The FHA’s forward mortgage portfolio achieved solid performance with a stand-alone capital ratio of 7.99%, an increase of 1.68 percentage points compared with the previous year.

As of September 30, the FHA had active insurance on more than 7.8 million single family forward and reverse mortgages, with a total unpaid principal balance of more than $1.2 trillion.

Photo: Marcelo Leal

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