MORTGAGE FINANCING. Actuarial Soundness of the Federal Housing Administration's Mutual Mortgage Insurance Fund.

摘要

We are here today to discuss H.R. 3995, the Housing Affordability for America Act of 2002, which amends certain laws concerning housing and community opportunity. Among other things, the act would establish riskbased capital requirements for the Mutual Mortgage Insurance Fund (Fund) of the Department of Housing and Urban Development's (HUD) Federal Housing Administration (FHA). Through the Fund, FHA operates a single-family insurance program that helps millions of Americans buy homes. The Fund, which is financed through insurance premiums, operates without cost to the American taxpayer. The Fund 's estimated economic value increased dramatically in 1999, prompting proposals to spend some of the Fund 's current resources or reduce net cash flows into the Fund. Concerned about the adequacy of the minimum 2-percent requirement set in current law and about proposals to spend what some were calling excess reserves, you asked us to determine the conditions under which an estimated capital ratio of 2 percent would be adequate to maintain the Fund 's financial health. We first presented the results of this analysis last year and suggested ways to better evaluate the financial health of the Fund. My testimony today is based on that work and focuses on Section 226 of H.R. 3995. I will (1) briefly describe what the Fund represents, (2) discuss the results of our analysis of the adequacy of a 2- percent minimum requirement, and (3) explain how the current measures of financial soundness could be improved.