The primary mission of the Federal Housing Administration (FHA) is to facilitate access to reasonably priced mortgage financing, with a particular focus on individuals with low to moderate incomes and those embarking on their first home purchase.

Furthermore, the FHA lends its support to the construction of both affordable and market-rate rental properties, along with the establishment of hospitals and residential care facilities, not only in communities throughout the United States but also in its territories.

[5] This situation posed a significant obstacle for many working and middle-class families, rendering home ownership financially unattainable.

This unfortunate circumstance led to a substantial number of homes being foreclosed upon, which, in turn, precipitated a sharp decline in the housing market.

His role was pivotal in formulating the initial underwriting criteria for FHA-insured mortgages, a process that ultimately led to the development of the Redlining policy.

Among these criteria, the two most pivotal were "Relative Economic Stability," accounting for 40% of the appraisal value, and "protection from adverse influences," contributing an additional 20%.

In 1935, the FHA furnished its appraisers with an Underwriting Manual, which included the following directive: "If a neighborhood is to retain stability it is necessary that properties shall continue to be occupied by the same social and racial classes.

"[8] Due to the FHA's appraisal criteria, which stipulated a whites-only occupancy requirement, racial segregation became an integral component of the federal mortgage insurance program.

This creation played a pivotal role in setting up a secondary mortgage market, enabling banks and investors to buy and sell existing home loans.

Following the enactment of the Serviceman's Readjustment Act, popularly known as the GI Bill, in 1944, the FHA orchestrated a system of long-term mortgages to facilitate the construction and sale of private homes.

These transformative changes contributed significantly to a surge in American homeownership, with the percentage of families residing in owner-occupied homes increasing from 44% to 63% between 1934 and 1972.

[10] During World War II, the FHA financed a number of worker's housing projects including the Kensington Gardens Apartment Complex in Buffalo, New York.

The designated Commissioner would assume authority over all departmental programs pertaining to the private mortgage market, in addition to their dual roles as Assistant Secretary and head of the FHA.

[17][18] The troubled loans weighed heavily on the FHA's capital reserve fund, which by early 2012 had fallen below its congressionally mandated minimum of 2%, in contrast to more than 6% two years earlier.

The 3.5% requirement can be met by using the borrower's personal funds or by receiving a qualified gift from a family member or another eligible source.

During the 1950s, 1960s, and 1970s, the FHA played a crucial role in catalyzing the construction of millions of privately owned apartments designed for elderly, handicapped, and lower-income Americans.

In the 1970s, amid soaring inflation and energy costs that threatened the viability of numerous private apartment buildings, the FHA's emergency financing provided essential support to financially struggling properties.

[22][failed verification] The Federal Housing Administration (FHA) has had its most pronounced impact on minority populations and urban areas.

In particular, nearly half of the FHA's business in metropolitan areas is concentrated in central cities, a significantly higher proportion than that observed with conventional loans.

Furthermore, minorities accounted for 36.24% of FHA purchase mortgage borrowers in the calendar year 2018, a significant contrast to the 19.94% observed through conventional lending channels.

[28] The Federal Housing Administration (FHA) implemented mortgage underwriting standards that had a discriminatory impact on minority neighborhoods.

This discriminatory practice is evident in the fact that between 1945 and 1959, African Americans received less than 2 percent of all federally insured home loans.

[29][30] As subsidized mortgage insurance became increasingly significant in the housing market, property values in minority neighborhoods within inner cities experienced a sharp decline.

Beginning in 1935, the FHA instituted guidelines designed to discourage private mortgage investors from extending loans to properties in minority areas.