Annual Performance Plan 508

In November 2012, FHA introduced its revised Loss Mitigation Waterfall to better ensure that each
owner-occupant borrower received a loss mitigation retention product with a high probability of a
sustainable mortgage payment, while minimizing losses to the Mortgage Mutual Insurance (MMI) fund.
The revised Loss Mitigation Waterfall established specific criteria for formal forbearance/repayment
plans, loan modifications, and FHA’s Home Affordable Modification Program (FHA-HAMP) that targeted
a 20 percent mortgage payment reduction for eligible borrowers. Recipients were assisted in FY 2013
and FY 2014 and it is anticipated that this metric will trend toward the minimum target of 20 percent as
the loss mitigation waterfall allows for one modification in a 24 month period and delinquency rates are
declining. The revised waterfall helped lower re-default rates on loan modifications to 8.38 percent and
7.63 percent in FY 2013 and FY 2014, respectively.
FY12
Actual
FY13
Actual
FY14
Actual
FY14
Target
FY15
Target
FY16
Target
15.9% 19.3% 51.7% 20% ≥20% ≥20%
Number of FHA-insured mortgages benefitting from housing counseling
This is the number of FHA borrowers that receive pre- or post-purchase counseling.
FY12
Actual
FY13
Actual
FY14
Actual
FY14
Target
FY15
Target
FY16
Target
No Data No Data No Data NA Establish Baseline Target TBD
Capital Reserve Ratio
The capital ratio compares the “economic net worth” of the MMIF to the dollar balance of active, insured
loans, at a point in time. Economic net worth is defined as a net asset position, where the present value
of expected future revenues and net claim expenses is added to current balance sheet positions. The
capital ratio computation is part of an annual valuation of the outstanding portfolio of insured loans at
the end of each fiscal year.
FY12
Actual
FY13
Actual
FY14
Actual
FY14
Target
FY15
Target
FY16
Target
-1.44% -0.11% 0.41% 1.2% 2.0% 11 2.0% 12
11
The 2 percent target for FY 2015 and FY 2016 represents the statutory requirement for the fund; however, while the fund is on a positive
trajectory towards meeting this target, it is uncertain whether the target will actually be achieved by FY 2015 or FY 2016.
12
ibid.
Strategic Goal: Strengthen the Nation’s Housing Market to Bolster the Economy and Protect Consumers
41