Federal Housing Administration-insured loan originations took a dive during the most recent fiscal year.
The number of single-family originations endorsed for insurance by FHA amounted to 555,557 for the fiscal year ended Sept. 30, 2005, plunging 44% from 998,441 in fiscal 2004, according to FHA Outlook reports. Compared to fiscal year 2003, the latest number is down by more than 58%.
Falling production has prompted HUD to loosen FHA guidelines. Recent changes include the expansion of loan-to-values on cashouts to 95%, the allowance of up to $35,000 in home repairs to be rolled into Streamlined (k) loans, and the reduction of minimum branches required for lenders to operate nationally to 13.
Purchase originations represented nearly 64% of the latest production, refinance loans accounted for about 29% and home equity conversion mortgages, or reverse mortgages, added approximately 8%, the report said. ARM originations reportedly accounted for about 18% of total FHA endorsements.
HUD reported 228,298 FHA loans were delinquent as of September, 11% better than the prior year.
The outlook indicated FHA-insured originations are projected to increase to 600,000 in 2006.