News release: “The U.S. Department of Housing and Urban Development (HUD) today released its annual report to Congress on the financial condition of the Federal Housing Administration (FHA) Mutual Mortgage Insurance (MMI) Fund. In reporting on findings of the independent actuarial study, HUD indicates that while FHA continues to be impacted by losses from mortgages originated prior to 2009, this report does not directly affect the adequacy of capital balances in the MMI Fund. The independent study found that as the housing market continues to recover, the capital reserve ratio of the MMI Fund used to support FHAs single family mortgage and reverse mortgage insurance programs fell below zero to -1.44 percent. This represents a negative economic value of $16.3 billion. This does not mean FHA has insufficient cash to pay insurance claims, a current operating deficit, or will need to immediately draw funds from the Treasury. The need to draw on Treasury funds is determined not by the economic assumptions of this actuarial review but those used in the Presidents FY 2014 budget proposal to be released in February, with a final determination on a potential draw made in September. Also, the actuarys estimate of the Funds economic value excludes $11 billion in expected capital accumulation through the end of FY 2013. Finally, HUDs report includes additional actions designed to contribute billions of dollars in added value to the MMI Fund over the next several years.”
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