Takeaways from the 2018 Federal Housing Administration Annual Report

Takeaways from the 2018 Federal Housing Administration Annual Report

On Thursday, November 15, the U.S. Department of Housing and Urban Development (HUD) released the Federal Housing Administration (FHA) Annual Report for 2018 (“2018 Report”)[i] to Congress. The 2018 Report provides the financial condition of FHA’s Mutual Mortgage Insurance Fund (“the Fund”). As you may know, the FHA uses the Fund to provide single-family finance programs, insuring forward mortgages, refinance transactions and reverse mortgages. Roughly 11 percent of single-family residential mortgage debt is insured by the FHA.[ii]

Here are some interesting takeaways from the Report.

  • Improving Capital Ratio – The overall health of the Fund continues to improve. Up from 2017’s 2.18 percent, the Fund’s 2018 overall capital ratio is 2.76 percent. By statute, the ratio must be above 2.00 percent but was at 0.42 percent as recently as 2014.[iii] The reverse mortgage program continues to be volatile, with decreased use from Fiscal Year (FY) ‘17 and an economic net worth of negative $13.63 billion.
  • Decreased Use of FHA Forward Mortgage Loans – The FHA’s market share for purchase mortgages decreased in FY 2018, from 882,080 in FY ‘17 to 776,284 in FY ‘18.
  • First-time Homebuyers Use the FHA Loan - Of the 776,284 forward purchase loans, 82.7 percent (or 642,921) were for first-time homebuyers, an increase in share from FY ‘17. As an aside, Alabama’s First-time Homebuyers Savings Account program will start in January 2019, providing another tool for first-time homebuyers and those returning to the housing market. Read more about Alabama’s First-time Homebuyers program here.
  • Average Loan Amount Rising – The average mortgage amount for FY 2018 increased 2.34 percent in FY 2018, from $201,338 in 2017 to $206,041 in 2018.
  • Forward Mortgage Claims Decrease – Claims on forward mortgages, both refinance and purchase mortgages, decreased in FY 2018. 74,508 claims were filed in 2018 for a total of $9.58 billion, down from 102,469 claims filed in 2017 for a total of $13.29 billion.


[i] See HUD’s Press Release for the 2018 Report here.

[iii] According to HUD, “FHA maintains reserves to cover both future claims, as well as an additional statutorily required capital cushion of 2.0 percent of all Insurance-in-Force (IFF). This 'Capital Ratio' is calculated by dividing the Fund's Economic Net Worth ($34.8 billion in FY 2018) by total IFF of $1.26 trillion. As noted above, the FY 2018 Capital Ratio of the Fund is 2.76 percent, an increase from the end of FY 2017.” https://www.hud.gov/press/press_releases_media_advisories/HUD_No_18_136