The Federal Housing Administration (FHA) is on its way to financial recovery. The agency’s chief said the government body is benefiting from the fees borrowers shoulder and on more stringent standards imposed by lenders.

“While there is still much work to be done, FHA is on a predicted path that will put the agency in a stronger position for the future,” FHA Commissioner David Stevens said.

He made the remarks in a prepared statement he is set to deliver before House of Representatives Financial Services Committee today. The remarks were posted in the FHA website. He also noted that compared to loans made in previous years, the mortgages FHA insured in last year and this year are “much stronger.”

According to an actuarial study released late last year, FHA’s capital reserves stood at only 0.53% of the value of the mortgages it guarantees. It is required by law to have coffers of at least 2% of the mortgage loans it ensures.

As a measure to raise its capital reserves, it was authorized by Congress to triple the annual fees it imposes on borrowers. It can now raise the rate up to a 1.5% over the duration of the loan. Previously, the cap was set at 0.55%. Stevens’ testimony before the House committee today comes a month before the staggered increases on the annual rate are started.

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