Mortgage Financing:

Financial Health of FHA's Home Mortgage Insurance Program Has Improved

T-RCED-94-255: Published: Jun 30, 1994. Publicly Released: Jun 30, 1994.

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GAO discussed the actuarial soundness of the Federal Housing Administration's (FHA) Mutual Mortgage Insurance Fund. GAO noted that: (1) the fund's economic value has improved significantly in recent years and the fund is accumulating sufficient capital reserves to become actuarially sound; (2) the fund's economic net worth was $600 million at the end of fiscal year (FY) 1992 and $4.9 billion at the end of FY 1993, which represents a capital ratio of 0.21 percent and 1.83 percent respectively; (3) the fund's financial health was primarily restored by favorable economic conditions in 1993, although legislative and program changes contributed to its improvement; (4) the fund did not surpass its 1992 mandate for capital reserves until the end of FY 1993, which was within 0.17 percent of its November 2000 target of 2.0 percent; (5) the fund's ability to achieve its reserve target by November 2000 and to maintain that ratio beyond that date depends on economic and program factors that affect its financial health; and (6) the GAO estimate of the fund's economic value is similar to the estimate prepared by an FHA contractor.

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