Annual Report to Congress Regarding the Financial Status of the FHA Mutual Mortgage Insurance Fund Fiscal Year 2012, U.S. Department of Housing and Urban Development, November 16, 2012
house price appreciation estimates used for this actuarial study are significantly lower than those used last year. This accounts for an estimated $10.5 billion in reduced value compared to the actuarys projection last year of what the Funds economic value would be at the end of FY 2012. In addition, the house price assumptions used by the independent actuary do not include improvements to home prices observed since June, and the estimates of near-term movements in house prices are depressed by a high level of refinance activity in the particular index series used. Second, the continued decline in interest rates, while good for the overall economy, is costly to FHA…Third, based on recommendations made by the GAO, HUDs Inspector General and others, the actuary changed the way it reflects losses from defaulted loans and reverse mortgages in the economic value of the MMI Fund.”
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