The FHA Is Still Stable

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Rumors that the mortgage program of the Federal Housing Administration is in trouble have been circulating for the past few months, but official statistical figures clearly indicate that this is not the case. The FHA shows all signs of stability. What’s more, the FHA loans are now more easily accessible as lenders are looking to counter the effect of climbing interest rates.

The rumors were fueled by the FHA borrowing $1.7 million from the Treasury in September 2013. This move was necessitated by the lower reserve level, which has to equal 2% of all loans. Despite the rumors, however, the FHA loans remained quite popular with home buyers. They accounted for 22% of all mortgages originated by lenders in February 2014. Their share in the total mortgage origination volume is projected to increase in the coming months due to lenders lowering their requirements. Now home buyers can qualify for an FHA loan with a credit score of just 600 while in 2013, most lenders required scores higher than 620 and 640 in some cases.

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At the same time, the FHA has been doing quite well financially. It has $48 billion in cash reserves. Experts explain that it was forced to borrow additional funds due to the fact that the accounting requirements, which it has to adhere to, do not take into account the development of the mortgage program over the years.

Another important factor which indicates stability is that the FHA has been profitable in the past three years. It managed to overcome the housing and mortgage crisis of 2008 and 2009 and now its future looks bright. In 2013 alone, the FHA made a gross profit of $12.2 billion.

Overall, home buyers can be fully confident when taking out FHA loans for financing the purchase of a house. Even if today’s financial performance numbers are not sufficient for easing their mind, it should be pointed out that the FHA has had no unpaid claims since the 1930’s.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

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