A significant drop in the FHA’s Mutual Mortgage Insurance Fund’s excess capital reserve has renewed calls for a smaller FHA and a limited government role in the mortgage market, even as opponents argued for the agency to remain on track and continue insuring high-quality loans. The annual actuarial report on the condition of the MMI Fund released this week revealed that the fund’s capital reserves dropped from 0.50 percent at the end of fiscal 2010 to 0.24 percent as of the end of September, the close of the government’s 2011 fiscal year. The program is required to have minimum capital reserves of 2.00 percent. The FHA was...