What role does the Federal Housing Administration (FHA) play in real estate?

The Federal Housing Administration (FHA) plays a crucial role in the real estate market by providing mortgage insurance on loans made by FHA-approved lenders. This insurance protects lenders against losses that may occur if a borrower defaults on their mortgage payments. By insuring these loans, the FHA helps to make housing more accessible, particularly for first-time homebuyers and those with lower credit scores, as lenders are more willing to offer loans when they have this insurance backing.

This function is essential because it encourages lending and provides borrowers with favorable terms, such as lower down payments and more flexible qualifying criteria. The presence of FHA mortgage insurance helps stimulate the housing market, making homeownership attainable for a broader range of consumers.

In contrast, the other choices do not accurately describe the primary function of the FHA. While the FHA does not regulate property taxes, set property listing prices, or oversee public housing developments directly, it does facilitate a stable environment for real estate transactions through its mortgage insurance program.