|Origination of loans insured by the Federal Housing Administration tripled last year, and this year's activity is projected to more than quadruple from just two years ago. At the same time, credit quality has substantially improved.
FHA volume was $181 billion last year, Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, told the National Association in Washington, D.C., today.
Volume leapt from just $60 billion in 2007.
"Since the president announced his modification plan on Feb. 18, rates on 30-year mortgages dropped to record lows, below 5 percent, and refinancing applications have surged," Donovan told the group.
He noted that HUD will be requesting expanded loan commitment authority for both FHA and Ginnie Mae because of forecasted growth in FHA fundings.
During fiscal 2009, HUD projects $290 billion in FHA originations.
The secretary said that the agency is asking for endorsement authority up to $400 billion for 2010. That level of volume would work out to around 2.25 million loans.
FHA market share has risen from 1.9 percent in the fourth-quarter 2006 to 23.7 percent in the fourth-quarter 2008.
Donovan noted that tighter underwriting guidelines in the conventional mortgage market have resulted in a substantial increase in FHA borrower quality. Average FHA credit scores have risen from 626 in February 2008 to 678 as of March 2009.