Mortgage Financing: Financial Health of FHA's Home Mortgage Insurance
Program Has Improved (Testimony, 06/30/94, GAO/T-RCED-94-255).

The Federal Housing Administration's (FHA) Mutual Mortgage Insurance
Fund made significant progress during fiscal year 1993 toward achieving
the capital reserve needed for actuarial soundness under the law.
Clearly, legislative and other program changes have helped restore the
Fund's financial health and reverse the trend of the late 1980s and
early 1990s toward insolvency. Fiscal year 1993 was, however, an
unusually good year for FHA because actual economic conditions and
forecasts of future economic conditions were favorable. Nevertheless,
forecasting economic net worth and resulting capital ratios to determine
whether FHA will have the funds needed to cover its losses over the life
of 30-year loans it has insured is uncertain. Loan performance, and
therefore economic net worth and capital ratios, will depend on several
economic and other factors, such as the rate of appreciation in house
prices and premiums charged FHA borrowers. Loan performance will also be
affected by the demand for FHA-insured loans, which partly depends on
alternatives available from private mortgage insurers. The desire to
assist home buyers must be carefully weighed against the government's
potential financial risk and expectations for the housing market's
future performance.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-RCED-94-255
     TITLE:  Mortgage Financing: Financial Health of FHA's Home Mortgage 
             Insurance Program Has Improved
      DATE:  06/30/94
   SUBJECT:  Mortgage programs
             Mortgage protection insurance
             Federal aid for housing
             Financial management
             Financial analysis
             Budgetary reserves
             Projections
             Funds management
             Homeowners insurance
             Internal controls
IDENTIFIER:  Mutual Mortgage Insurance Fund
             HUD Single-Family Mortgage Insurance Program
             
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