FHA Watch, December 2013 (Vol. 2, No. 12)

Article Highlights

  • FHA's private GAAP-estimated net worth declines to lowest level in 9 months.

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  • For 5th year, FHA violates federal law by failing to meet minimum capital standard.

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  • If the economy catches a cold, the FHA gets pneumonia.

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This Issue’s Highlight

Spotlight on the FHA’s 2013 Actuarial Study

For the fifth year in a row, the Federal Housing Administration (FHA) violated federal law by failing to meet its minimum capital standard of 2 percent—equal to about $22 billion on its $1.1 trillion book of insurance in force. The 2013 Actuarial Study found that the FHA had an economic net worth of −$8 billion, up from −$13.5 billion last year but still $30 billion short of the 2 percent statutory standard.

Under this rosy scenario, it is no surprise that each new book of business the FHA adds looks profitable. It is also no surprise it has had to revise the expected cumulative claim rates for the 2009–12 vintages substantially upward from last year’s estimates.

This Month’s Features

Spotlight on the FHA’s 2013 Actuarial Study
Another Year of Rosy Scenarios

Spotlight on Best Price Execution
Planned GSE Guarantee Fee Increase Adds to Ginnie Agency Price Advantage over Fannie

Spotlight on Insolvency
FHA’s Private GAAP-Estimated Net Worth Declines to Lowest Level in Nine Months

Spotlight on Delinquency
All Rates Experience Moderate Increases from October to November

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Edward J.
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