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FHA Flounders in Final Month of Fiscal Year

The government insured fewer loans during the final month of its fiscal year, and subsequent months could see a further decline. Delinquency on government mortgages has worsened by nearly a hundred basis points during the past year.

September saw 109,293 loans endorsed by the Federal Housing Administration for $20.0 billion, according to monthly results published by the Department of Housing and Urban Development.

Business slowed from August, when 126,051 loans were insured for $23.1 billion. But activity was elevated from the same month last year, when 91,963 mortgages were insured for $16.2 billion.

FHA originators endured longer processing times in September, with the average weeks from application to closing slowing to 6.8 weeks from 6.3 weeks a month earlier. Turn times were much faster a year earlier at just 5.9 weeks.

Since January, FHA has endorsed 970,274 mortgages for $178.6 billion.

During FHA’s fiscal-year 2012, which ended on Sept. 30, a total of 1,239,874 loans were endorsed for $226.5 billion. Final results fell short of HUD’s projections that fiscal-year 2012 would end with 1.4 million mortgages insured for $248.6 billion.

Fiscal activity mostly kept up with fiscal-year 2011, when 1,271,211 loans were insured for $236 billion.

October monthly numbers are likely to be lower based on new applications, which fell to 142,978 from August’s 178,314.

On a dollar-volume basis, FHA refinance production was off 3 percent from the previous month to $9.2 billion. Refinance applications fell 22 percent for the month.

Purchase financing tumbled 20 percent to $9.9 billion in September. FHA applications for home purchase financing were off 17 percent.

FHA endorsed 3,706 home-equity conversion mortgages for a maximum claim amount of $0.9 billion. Volume fell 10 percent from the previous month. A 15 percent drop in HECM applications means business could ease in the upcoming 60 days.

Section 203(k) volume fell to 1,599 endorsements from August’s 2,030. Condominium business was down to 4,538 endorsements in September from 5,009, and manufactured housing loans declined to 1,670 units from 2,001.

FHA grew its mortgage insurance in force to 7,710,746 loans for $1.0833 trillion from a month earlier, when 7,691,776 loans were insured for $1.0805 trillion.

FHA’s book stood at 7,304,368 loans for $1.0197 trillion as of Sept. 30, 2011.

Seriously delinquent loans, which FHA classifies as loans that are at least 90 days past due, accounted for 9.58 percent of all FHA loans outstanding as of the end of the third quarter. Delinquency worsened from 9.47 percent at the end of August. At the same point in 2011, the delinquency rate was 8.69 percent.

The number of delinquent FHA mortgages worked out to 738,991 as of Sept. 30.

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