Which government agency is responsible for providing mortgage insurance on FHA-approved loans?

The Federal Housing Administration (FHA) is responsible for providing mortgage insurance on FHA-approved loans. This agency plays a crucial role in facilitating home ownership by insuring loans made by approved lenders, thus encouraging them to offer mortgages to borrowers who may have lower credit scores or insufficient down payment funds. By providing this insurance, the FHA reduces the lender's risk in case of borrower default, leading to broader access to home financing for potential homeowners.

The other options do not provide the same function as the FHA. The Federal Reserve Bank primarily manages monetary policy and regulates banks, whereas the Department of Housing and Urban Development (HUD) oversees the FHA but does not provide insurance itself. Mortgage Insurance Corporation (MIC) is not a recognized federal agency and does not offer the same insurance products as the FHA. The specific role of the FHA in providing mortgage insurance is critical for the home loan market, making it a key player in the housing finance system.