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Researchers Argue for Lower FHA Premiums

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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