WASHINGTON — The Federal Housing Administration's mortgage insurance fund is back in positive territory but still behind schedule to meet its target level, according to an auditor's report released Monday.

The fund's actuarial report for fiscal year 2014 showed the agency hitting a 0.41% capital ratio, which is less than the 1.2% projected last year. Auditors now project the Mutual Mortgage Insurance Fund will not hit its statutory minimum of 2% for another two years.

The disappointing results will likely make it harder for Department of Housing and Urban Development officials to reduce FHA mortgage premiums, which have been elevated in recent years in order to rebuild the agency's capital.

Still, the report showed the fund is now solvent after having registered a negative-0.11% ratio for fiscal year 2013.

"I am pleased to report the MMI fund is back in the black," HUD secretary Julian Castro told reporters Monday morning.

Castro said the fundamentals of the FHA fund are strong. But he declined to comment about a possible premium cut, noting that he will "reserve judgment" until FHA completes a full analysis.

Last year, the independent auditors had projected that FHA would reach a 1.2% capital ratio in FY 2014 and 2% in FY 2015.

But this year's analysis of the FHA reverse mortgage program resulted in a big hit to the fund. The economic value of the Home Equity Conversion Mortgage program fell from $6.5 billion in FY 2013 to negative-$900 million in FY 2014. FHA officials attributed the drop to expectations that higher long-term interest rates would reduce the value of the FHA-insured reverse mortgage portfolio.

FHA officials noted Monday that a drop in single-family loan endorsements in FY 2014 also hampered the fund's performance.

Overall, the new report shows that the economic value of the FHA fund rose to $4.8 billion in FY 2014 from negative-$1.1 billion the prior year.

The auditors are projecting that FHA will reach a 2% capital ratio and an economic value of $23.4 billion in FY 2016.

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