Revitalizing the FHA

ONE OF THE New Deal's enduring innovations is the Federal Housing Administration, the mortgage-guarantee agency established in 1934. The FHA has insured more than 34 million home loans over the past 73 years. FHA-insured loans are, in turn, packaged and sold as securities that are backed by the Government National Mortgage Association. This arrangement has encouraged financial institutions to lend to low- and moderate-income households that do not qualify for "prime" mortgages but that can meet the FHA's less-stringent borrowing requirements. The FHA is one reason that America's homeownership rate grew from 40 percent of households at the time of the agency's inception to 68 percent today.

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