Government agencies speak in terms of millions, billions, and trillions of dollars, and it is good news, and rare, when we hear that one has actually followed its budget or exceeded expected savings in any way. That’s why Palm State Mortgage is saying “Bravo” to the FHA, for its stronger, healthier financial profile in 2014.

Last week, the White House revealed that the “The U.S. Federal Housing Administration, which turned to the Treasury for aid in 2013, will avoid that fate this year due to efforts to shore up its finances…”  To us this is a little bit like saying: No bailout will be needed here in 2014!”

This week, Palm State Mortgage takes a look at ten key points about the FHA recent history, and what the above revelation means in terms of money and how it effects borrowers.

1. Last Year’s Business: In fiscal year 2013, budget writers said the FHA, would require a 943 million dollar Treasury subsidy, however, by the end of the fiscal year, Sept.30, the agency had taken $1.7 billion dollars.

Sad to say, this was the first draw ever taken in the government mortgage insurer’s 80-year history.

2. This week, the Obama administration stated that the healthier FHA had built up “adequate reserves and will not need a second subsidy.”

Today, Palm State Mortgage takes a look a little history and recent background concerning the FHA, to help you see the tremendous scope of this agency.

3. A Staggering Amount of Business: “The agency insures $1.1 trillion worth of mortgages and backs about 17 percent of the U.S. loan originations for home purchases.” ( This is more than four times the 4 percent share it covered in 2007, before the housing crisis.)

4. A Staggering Amount of Debt: “About 8 percent of FHA-insured loans were at least 90 days delinquent in October,2013,” but this was better than the 9.5 percent in 2012.

5. The Guarantee: When loans default, the FHA has to cover the losses it insured. Most of the FHA’s devastating losses stem resulted from loans it backed from 2007 to 2009, with the housing crisis.

6. The Law: To put it simply, Congress demands that the FHA retain enough cash to cover all “expected future losses and must take a taxpayer subsidy if its projected revenue falls short.”

7. The Strategy Of Improvement: “How will the FHA avoid taking another subsidy? Hint: Here is where your budget, as a borrower, comes in: “To bolster its reserves, the agency has raised the amount it charges borrowers to insure mortgages against default and tightened underwriting.” FHA Commissioner Carol Galante stated, “The improved strength of the fund allows FHA to sharpen its focus on placing home ownership within the reach of many creditworthy Americans,” said today on a conference call with reporters.

8. Your Bottom Line: Thus, if you are a borrower this year, you can see that your mortgage insurance fees might be higher than in previous years, and you might be expected to make a larger down payment than 3.5 percent in the future.

9. A Little Controversy: Meanwhile, Reuters reported, “An independent audit, using a separate calculation from White House budget forecasters, said in December that the FHA’s insurance fund would fall $1.3 billion short in the current fiscal year.”

10. FHA Remains Cautious:  The forecasters might be debating a moot question: Although the above steps for improvement of its funds have been initiated, keep in mind that The FHA will not be required to “finalize the size of any request until September, just as the fiscal year is drawing to a close.” In other words, “The FHA has until the end of the current fiscal year to determine whether it will require aid from the Treasury this year.”

So, we will be keeping watch for you in the Fall of 2014, and we will see who was correct in their calculations, the independent audit or the White House budget makers.

Palm State Mortgage thanks you for reading our blog, and pledges to continue bringing you the latest news in the mortgage, finance and real estate industry.