The Public Purpose of FHA

Roberto G. Quercia
Kevin A. Park
The University of North Carolina at Chapel Hill

Policy Briefs
The Policy Briefs department summarizes a change or trend in national policy that may have escaped the attention of researchers. The purpose is to stimulate the analysis of policy in the field while the policy is being implemented and thereafter. If you have an idea for future Policy Briefs, please contact david.l.hardiman@hud.gov.

Recent reviews of the Federal Housing Administration’s Mutual Mortgage Insurance (MMI) Fund find that the losses on its portfolio are projected to exceed the revenue from its existing insurance policies and its current capital resources. This article places the MMI Fund’s “negative economic value” and recent draw on the U.S. Treasury in context and argues that the justification for federal mortgage insurance is the public purpose it serves by filling gaps the private sector leaves, thereby contributing to a healthy and stable housing market.