The Urban Institute says that the Federal Housing Administration needs to update its approach to insurance premiums.

The federal government’s home mortgage insurance program is finally back in the black, having improved materially over the past year, yet its insurance premiums remain at record-high levels.

Our analysis indicates that that Federal Housing Administration (FHA) can significantly lower its premiums—charging current borrowers more appropriately for their risks—while continuing to build the necessary reserves against future losses.

Today’s high premiums penalize current borrowers for the pricing and performance of the earlier vintages and the deficit in the reverse mortgage program—the two main causes of the fund’s continuing inability to meet its 2 percent congressionally mandated reserve ratio.

Read the full report at the Urban Institute blog.