This week the FHA (Federal Housing Administration) is reporting that their serious mortgage delinquencies are falling. The rate dropped from 9.4% in January when 558,944 customers were seriously delinquent to 9.2% in February, decreasing the number of delinquent customers to 553,929. These numbers include those mortgages that are in foreclosure and bankruptcy. While the percentage change is small it is still seen as promising and is the lowest rate since last August.
The FHA has been under scrutiny recently for the number of delinquencies it has been reporting. Just a year ago the numbers were smaller with 7.3% of customers being seriously delinquent. During the current fiscal year the FHA has already paid out on 100,428 claims. While delinquencies are still increasing across the mortgage industry, we will have to wait to see if FHA delinquencies continues to fall or if February was a small reprieve.
Banking consultant and former FHA loan official Brian Chappelle points out that the improvements can most likely be attributed to the crackdown last year that the FHA imposed on abusive lenders. Under the crackdown 268 lenders, as well as six large firms, were banned by the agency from making FHA loans last year. Because of the enforcements, other FHA lenders started to look more closely at borrowers and not make loans so quickly. These actions greatly helped FHA’s loan performance rate.
Recently, new home buyers and current home owners that are looking to remortgage have been turning to the FHA for mortgage funding. With traditional lenders being much more stringent on whom they will lend to, more and more home buyers are applying for FHA loans. FHA applications were on the rise in February, up 31.2% from January. In February they received 165,239 applications where in January they only received 126,048. While more loans were received, less were actually funded. FHA funded 16.8% less loans in February than the previous month, funding only 131,978 loans.
Even though they funded fewer loans last month, FHA loans are up a considerable amount since last year during the same time period. They have funded 25% more loans than this time last year and the outstanding balance of those loans is also up 40%. Currently they have over six million mortgages insured for a balance of close to $800 billion.