What does the Federal Housing Administration (FHA) primarily do?

The Federal Housing Administration (FHA) primarily insures loans, which is why the correct choice is to indicate that the FHA provides insurance for mortgage loans. This insurance protects lenders against losses that might occur if a borrower defaults on their mortgage. By offering this insurance, the FHA enables lenders to extend loans to borrowers who might not qualify for conventional financing, thereby promoting home ownership among a broader range of individuals.

Other options are not aligned with the FHA's main role. While lenders may guarantee or originate loans themselves, the FHA does not perform these functions. Additionally, foreclosing on loans is a process initiated by lenders when borrowers default; it's not a primary function of the FHA. Instead, the FHA serves as a crucial player in enhancing access to mortgage financing through its loan insurance program.