Final answer:
The money for Federal Housing Administration loans comes from qualified lending institutions, which are then insured by the FHA to promote homeownership and provide protection to lenders. The correct option is c) the Federal Housing Administration Agency.
Step-by-step explanation:
The money for making Federal Housing Administration (FHA) loans is provided by qualified lending institutions. The FHA, established in the New Deal era, insures the loans made by these external lenders, thereby allowing them to offer financing to individuals who may not qualify under standard loan criteria. These FHA-insured loans encourage homeownership by offering lower down payments and more favorable terms than typical private market loans.
While the FHA itself does not provide the loan funds, it guarantees the loans, meaning that if a borrower defaults, the FHA will pay the lender a claim amount. This government-backed insurance makes lenders more willing to loan to a broader range of borrowers, thus fulfilling the FHA's mission to increase homeownership rates and stimulate the housing market.
Moreover, through its history, the FHA has played a role in both bolstering and regulating the housing market, at times influencing discriminatory practices such as redlining. These controversies highlight the complex legacy of the FHA in shaping the American housing landscape.
The correct option is c) the Federal Housing Administration Agency.