What is the primary function of the Federal Housing Administration (FHA)?

The primary function of the Federal Housing Administration (FHA) is to insure residential mortgage loans made by private lenders. This insurance provides lenders with a level of protection against losses that may occur if a borrower defaults on their mortgage. By insuring these loans, the FHA encourages lenders to offer loans to a broader range of borrowers, including those who might be considered higher risk or who have lower down payments. This role is crucial in promoting home ownership and making it more accessible to a diverse population.

In contrast, the other options focus on different roles that government entities or programs might play in the housing finance system. For instance, enforcing compliance with federal lending laws does involve oversight but is primarily the responsibility of agencies like the Consumer Financial Protection Bureau (CFPB). Purchasing and reselling mortgage loans in the secondary market is typically associated with entities like Fannie Mae or Freddie Mac, rather than the FHA. Lastly, while the FHA does help facilitate financial assistance through programs and loans, its main function is specifically the insurance of loans rather than providing direct financial aid to homebuyers.