Mortgage Financing

Pursuant to a congressional request, GAO provided information on the: (1) number of borrowers insured by the Mutual Mortgage Insurance Fund who might have been eligible to receive dividends from their mortgage insurance if the Federal Housing Administration (FHA) had been required to pay distributive shares in FY 1999; and (2) amount of annual premiums these individuals paid.

GAO noted that: (1) in fiscal year (FY) 1999, between 132,508 and 186,032 FHA borrowers who had voluntarily terminated their mortgages might have been eligible for distributive shares if FHA had paid such shares; (2) specifically, 186,032 FHA borrowers who had voluntarily terminated their mortgages in FY 1999 had received their mortgages in FY 1992 or earlier, and these mortgages were originated in years that produced profitable mortgages; (3) furthermore, 53,524 of these borrowers had their loans originated in FY 1992; (4) some of these borrowers would not have been eligible for distributive shares because they had their loans for less than 7 years when they voluntarily terminated them in 1999; (5) the remaining 132,508 borrowers had loans originated before 1992; (6) thus, the number of borrowers who voluntarily terminated their mortgages in 1999 and may have been eligible for distributive shares is between 132,508 and 186,032; and (7) using a similar methodology, GAO determined that the total annual premiums paid by these borrowers was between $271 million and $395 million.