About the FHA

The Federal Housing Administration

Generally known as FHA; the FHA provides mortgage insurance on the loans that are made by FHA approved lenders in the United States and its Territories. FHA is the largest insurer of mortgages in the world and has insured over 34 million properties since 1934. FHA insures mortgages on single family, multifamily, manufactured homes and hospitals.

FHA Mortgage Insurance Is:

The FHA mortgage insurance protects the lenders against loss if the homeowner defaults on the loan. The lenders have less risk because FHA will pay the lender if the homeowner defaults on the loan. These loans must meet the requirements established by FHA to qualify for insurance.

Comparing FHA Mortgage Insurance to Conventional Loans:

FHA-insured loans require small down payments, unlike conventional loans. An FHA loan has more flexibility than conventional loans; in calculating household income and payment ratios. The cost of the mortgage insurance is typically included in the monthly payment. Typically the insurance cost will drop off when the remaining balance on the loan is 78 percent of the value of the property.

FHA funding:

The funding of FHA is entirely self-generated income there by costing the taxpayers nothing. The mortgage insurance proceeds that is paid by the homeowners is deposited into an account that is used to operate the program entirely. Huge economic stimulation is provided through FHA in the form of stimulation to the country in the form of home and community development, which trickles down to local communities in the form of jobs, building suppliers, tax bases, schools, and other forms of revenue.

The History of the FHA:

In 1934 Congress created the Federal Housing Administration; FHA. In 1965 FHA became part of the Department of Housing and Urban Development; HUD.

FHA was created during a time when the housing industry was flat on its back.

  • 2 million construction workers had lost their jobs.
  • Terms were difficult to meet for homebuyers seeking mortgages.
  • Mortgage loan terms were limited to 50 percent of the property’s market value, with a repayment schedule spread over three to five years and ending with a balloon payment.
  • Only 4 in 10 households owned homes. America was a nation of renters.

In the 1940’s, FHA programs were helping finance military housing and homes for returning veterans and their families after the war.

During the 1950’s, 1960’s, and the 1970’s, FHA helped to motivate the production of millions of units of privately owned apartments for the elderly, the handicapped and lower income Americans. When inflation and energy costs were soaring; threatening the survival of thousands of private apartment buildings in the 1970’s, FHA’s emergency financing kept cash strapped properties afloat.

FHA had moved in to steady falling home prices and made it possible for potential homebuyers to get the financing they needed when recession prompted private mortgage insurers to pull out of oil producing states in the 1980s.

By 2001, the nation’s homeownership rate had soared to an all time high of 68.1 percent.

The FHA has insured over 34 million home mortgages and 47,205 multifamily project mortgages since 1934. FHA currently has 4.8 million insured single family mortgages and 13,000 insured multifamily projects in its portfolio.

In the 60 years since the FHA was created, much has changed and Americans are now arguably the best housed people in the world. FHA has helped greatly with that success.

FHA Today

The FHA became part of The Department of Housing and Urban Development (HUD) in 1965. FHA and HUD have insured over 34 million home mortgages and 47,205 multifamily project mortgages since 1934. FHA current portfolio has 4.8 million insured single family mortgages and 13,000 insured multifamily projects. The FHA is the only government agency that is completely self funded. They operate solely with their own income and with no cost to the tax payers. The FHA spurs economic growth in the form of home and community development.

The buget planning for 2008 HUD had projected a $143,000,000 budget shortfall stemming from the FHA program. This is the first time in three decades that HUD has made a request to Congress for a taxpayer subsidy. Even though FHA is statutorily required to budget neutral, the GAO is projecting taxpayer funded subsidies of half a billion dollars over the next three years, if no changes are made to the program.

Currently new budget numbers are projecting “windfall revenues” for FHA due to the collapse of the subprime market and a flood of new loans being originated with FHA.

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HUD Guidelines for Manufactured Homes

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