The Federal Housing Administration (FHA) has come under fire recently for the growing number of delinquencies in its portfolio, with some economists and industry observers even predicting that a bailout of the federal mortgage insurer is in the cards. But according to the agency’s latest operations report it’s beginning to see some improvements in the seriously delinquent column.
While still considerably elevated, the rate of loans 90 or more days overdue in FHA’s portfolio, including bankruptcies and foreclosures, dropped to 9.2 percent in February, down from a reading of 9.4 percent for the month of January.
Last month, the agency counted 553,929 mortgages that were in seriously delinquent status, compared to 558,944 the previous month.
That’s still up nearly two whole points compared to the 7.3 percent serious delinquency rate this time last year, but the short-term improvement is certainly a feather in the agency’s cap considering delinquency numbers industry-wide are still climbing.
So far this fiscal year, FHA reports that it has paid 100,428 claims, and the agency says most have been loss mitigation retention claims.
The appeal of government mortgages has yet to wane as homebuyers continue to see limited credit from traditional lenders. Applications for FHA-insured home loans increased 31.1 percent in February compared to the previous month. Total requests tallied 165,239, up from 126,048 in January.
However, according to the agency’s report, the number of FHA endorsements in February declined 16.8 percent. The federal insurer approved 131,978 single-family mortgages last month for $24 billion.
This involved 73,038 loans for home purchases, 51,916 refinances, and 7,024 reverse mortgages. The refinanced cases included 22,761 prior FHA cases, 29,156 conventional conversions, and one formally delinquent conventional conversion. With respect to the refinances, 10,447 were cash out deals –20.1 percent of the refinance actions.
No Hope for Homeowners (H4H) mortgages were insured, although the agency noted that it received 46 applications for the program. H4H was implemented back during the Bush administration as an avenue for borrowers at risk of default or foreclosure to refinance into an affordable 30-year fixed rate FHA loan, but the program has been widely criticized for its slow pick-up and minimal impact.
Currently, FHA is insuring just over 6 million mortgages, with an unpaid principal balance of $786.5 billion. A testament to just how much the agency’s market share has grown, that’s 25 percent more loans than FHA insured this time last year, and the outstanding balance amount is 40 percent higher than a year ago.
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