Question
Asked Mar 9, 2019
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The FHA implements its programs with which of the following procedures?
  Providing government bonds as collateral for loans
  Issuing an insured commitment covering the loan
  Funding a portion of each loan at closing
  Guaranteeing a portion of each loan
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Expert Answer

Step 1

Federal Housing Administration: The FHA's principal purpose was to protect home mortgage loans prepared by banks and other private moneylenders, in this way reassuring them to make more loans to imminent home purchasers.

Step 2

The FHA implements its program with the following procedures:

  • Issuing an insured commitment covering the loan
  • Funding a portion of each loan at closing
  • Guaranteeing a portion of each loan
Step 3

Justification:

FHA’s home mortgage is one that is safeguarded by the Federal Housing Administration. The FHA does not loan the cash; instead, it safeguards the loan. In the event that the home purchaser defaults on the loan, the FHA ensures that it will cover the losses for the lender. In spite of the fact that FHA loans are regularly utilized by first-time home purchasers with sub-prime credit, anybody is qualified. FHA's capacity to assist borrowers of unobtrusive methods is r...

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