February 2010 saw a drop in FHA mortgage delinquencies.
For the first time since the Federal Housing Administration (FHA) began publishing monthly delinquency reports in September 2009, the number of loans backed by FHA that are seriously delinquent fell in February 2010. According to the agency, approximately 4.8% of FHA insured loans made in the two years ending February 28, 2010 were at least three-months late, down 20 basis points from the two-year period of 5% ending January 31, 2010.
Default claims on FHA mortgages climbed throughout 2009 as the agency significantly increased its loan volume at the expense of depleting its reserves for the purposes of providing a much needed boost to the housing market. FHA agency officials maintain that FHA’s current problems are primarily rooted in the mortgages that it insured in 2007 and 2008, which are maturing into their worst years. Mortgage failures and defaults typically occur two to three years after they are obtained.
With the housing market expected to improve and loans from 2007 and 2008 moving past the two to three year failure point, agency officials are expecting losses to taper off as the FHA is expected to have to pay fewer claims to the lenders it insures moving forward. The FHA also began applying stricter guidelines and banned 268 lenders from making FHA loans in 2009. These bans sent a message to other lenders to scrutinize their borrowers more diligently, which led to fewer high risk loans being backed by the FHA and an improvement in overall FHA performance. Furthermore, more creditworthy borrowers are taking advantage of low current mortgage rates and FHA insured loans, as evidenced by the fact that applications for FHA purchases jumped 37% in February 2010 from January.
Total Mortgage Services is a fully approved FHA lender and offers some of the best current FHA mortgage rates available. Call us today with your FHA purchase or FHA refinance questions at 877-868-2503 to speak with one of our mortgage professionals.
Loading ...
RSS feed for comments on this post. TrackBack URL
Leave a comment