As of Sept. 30, the agency's reserves had an estimated value of $4.7 billion, up from $3.6 billion a year earlier. The current total represents 0.5 percent of all outstanding single-family home loans insured by the FHA, compared with 0.53 percent a year earlier. The margin narrowed from the previous fiscal year because the agency is insuring more loans.Originally created and posted on the Oregon Housing Blog.
The margin is far below the 2 percent cushion required by law. The reserves dipped below that level for the first time last year, and the agency has toughened up its lending standards and rooted out fraudulent lenders in an effort to regain its financial footing. Federal officials said these actions have paid off and expressed optimism about the agency's finances. The new audit shows that the reserves will approach the required level in 2014 and exceed it by 2015, according to a report submitted to Congress on Monday.
The rebound is expected to occur even though the auditing firm, Integrated Financial Engineering of Rockville, used much more pessimistic projections for home prices than it had the previous year. If not for the conservative price estimates, the FHA's reserves would have gained an additional $8.5 billion in value, mostly because FHA loans have attracted more creditworthy borrowers since 2009.
Tuesday, November 16, 2010
FHA Financial Report Issued: Mixed Bag.
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