FHA Reserves Drop below Mandated Levels; Need for Treasury Draw Uncertain

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Posted To: MND NewsWire

The U.S. Department of Housing and Urban Development (HUD) said today that the capital reserve ratio of the Federal Housing Administration's (FHA) Mutual Mortgage Insurance (MMI) Fund fell to a negative balance in FY2012. The Fund, which is Congressionally mandated to maintain a capital reserve ratio of 2 percent is now at -1.44 percent, representing a negative value of $16.3 billion. The news came with the release of HUD's annual report to Congress on the financial condition of the FHA MMI Fund which contains an independent actuarial study of the fund. The actuary's findings do not mean that FHA has insufficient cash to pay insurance claims , a current operating deficit, or will need to immediately draw funds from the Treasury. Any Treasury draw would be determined, not by the economic assumptions...(read more)

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Source: www.mortgagenewsdaily.com

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