|In its latest fiscal year, Federal Housing Administration endorsements doubled. But rapid growth combined with a deteriorating housing market has cut the capital ratio of its primary fund in half.
During fiscal 2008, which ended on Sept. 30, FHA endorsed 1,200,111 loans, more than double the 532,307 endorsements in fiscal 2007, according to the 114-page FHA Annual Management Report Fiscal Year 2008 from the U.S. Department of Housing and Urban Development.
"FHA saw an increase in market share primarily due to the collapse of the subprime mortgage market," the report stated. "Prospective borrowers who had opted for subprime loans in recent years are now choosing the dependability and safety of FHA products."
Purchases accounted for 632,000 of fiscal 2008 activity.
HUD said more than 35 million borrowers have utilized FHA financing since the program was launched during the Roosevelt administration in 1934.
Section 203 (b) loans endorsed were 1,032,553 during fiscal 2008 and accounted for 94 percent of single-family insurance in force.
Section 234 (c) endorsements were 48,148 and represented 5 percent of insurance-in-force. This program is used for condominium financing.
Home-equity conversion mortgages insured during fiscal 2008 were 111,661, rising from 107,103 during fiscal 2007. Since the program was launched, 454,745 HECMs have been insured.
FHA insured 647 multifamily loans for $4 billion in the most recent period. Apartment lending is done under Section 221(d) (4), Section 207/223(f) and Section 223(a).
Total insurance in force was $532 billion in fiscal 2008, climbing from $400 billion a year earlier.
The Mutual Mortgage Insurance Fund, which supports single-family originations, represented 94 percent of total single family insurance-in-force dollars. The MMI capital ratio fell to 3.00 percent in 2008 from 6.4 percent in 2007.
"In fiscal year 2008, the estimated economic value of the MMI fund decreased significantly with the forecast of expected house price declines due to a declining housing market," HUD explained. "Conversely, the total MMI insurance-in-force, increased significantly due to the volume of new endorsements."
The remaining dollars were spread through the General Insurance Fund, Special Risk Insurance Fund and Cooperative Management Housing Insurance Fund.
The number of FHA loss mitigation cases was 101,167 in fiscal 2008. The agency resolved 65 percent of claims through loss mitigation.
FHA's Appraiser Watch system led to the removal of 45 appraisers in 2008 from FHA's roster. The prior year, 60 appraisers were removed.
FHA assets ended September at $37.7 billion, and its net position was $10.8 billion.