A Look At The FHA On Its 90th Birthday

The Federal Housing Administration is celebrating its 90th birthday, and its impact on U.S. housing and finances has been widespread.

The FHA was created in 1934 by the National Housing Act as a way to help restructure the financial system during the Great Depression. Its goal was to improve housing standards, provide a method of mutual mortgage insurance, and reduce foreclosures for American families.

Officials from the U.S. Department of Housing and Urban Development held an event in Washington, D.C., to commemorate the event, with opening remarks by HUD Acting Secretary Adrianne Todman and Federal Housing Commissioner Julia Gordon. Attendees included past FHA Commissioners and leaders from the housing finance and advocacy communities.

“FHA’s 90th anniversary is an opportunity to reflect on both the successes and challenges of the program throughout its nine decades, and to celebrate the enduring value FHA offers to this nation’s first-time homebuyers, borrowers of color, and underserved communities,” said Federal Housing Commissioner Julia Gordon.

HUD made some major moves in 2024, including $5.5 billion in grants to encourage affordable housing development and assistance. 

More than 1,000 communities will receive the money, which will go toward various housing-related areas, including resources for homebuilding, supporting renters and homeowners, and assistance for the homeless.

But the administration has also seen some trouble, including a lawsuit filed in March that accuses it of failing to refund nearly $385 million in premiums paid over a 20-year period. The suit further claims that the refund process is intentionally difficult and slow.

Critics of the FHA point to its up-front and annual MIPs as reasons why typical borrowers should opt for conventional mortgages if they qualify, saying they will save money over the life of the loan.

Historically the FHA has been accused of causing harm by stifling homeownership for communities of color. It used redlining to prevent Black buyers from accessing the same resources white families could, and the impact of that discrimination is still felt today. The Underwriting Manual of the Federal Housing Administration stated explicitly that “incompatible racial groups should not be permitted to live in the same communities.”

Still, FHA leaders highlight its importance to the housing sector.

“The Federal Housing Administration has provided a path to homeownership for millions of people, and changed their families’ lives for generations to come,” said HUD Acting Secretary Adrianne Todman. 

“Under the Biden-Harris Administration, we are ensuring that FHA is accessible to everyone, particularly first-time homebuyers and people we have provided with fair access to homeownership in the past.”

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