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FHA Volume Higher But Headed Lower

FHA News

Originators reversed a four-month losing streak and pushed government originations higher. But if new applications are any indication — this month’s volume is headed for a tumble. The decline in new applications, which came despite an increase in reverse mortgage applications, was driven by a steep drop in refinance activity. Meanwhile, serious delinquency got more serious.

During December, 179,155 loans for $32.5 billion were endorsed by the Federal Housing Administration, according to new data from the U.S. Department of Housing and Urban Development. Endorsements increased from 157,119 units for $28.7 billion a month earlier and 140,076 endorsements for $25.1 billion a year earlier.

Since its fiscal year began on Oct. 1, FHA endorsements totaled 512,536 — including 304,968 purchase transactions, 182,775 refinances and 24,793 HECMs. By the end of its fiscal year, the agency projects 1.9 million total endorsements.

New FHA applications tumbled to 141,766 from November’s 205,808. The decline was primarily attributable to the drop in refinance applications — which fell to 60,387 from 112,095. But reverse mortgage applications rose to 6,926 from 6,571.

Purchase transactions accounted for 59 percent of December’s endorsements, while refinances represented another 36 percent and home-equity conversion mortgages accounted for nearly 5 percent.

HECM volume rose to 8,284 loans for a maximum claim amount of $2.3 billion from November’s 7,738 HECMs for $2.2 billion. But reverse mortgage production tumbled from 9,761 in December 2008 — though the maximum claim amount a year ago was only $2.1 billion.

Section 203(k) endorsements climbed to 1,800 from the prior month’s 1,637 and the prior year’s 1,409. Condominium endorsements increased to 10,483 from 9,252 and December 2008’s 6,417

The weighted average FICO score on all FHA endorsements last month was 694, unchanged from November. But the average improved from 661 a year ago. The average processing time from application to closing lengthened to 7.5 weeks from 6.5 weeks the previous month and 5.4 weeks a year ago.

As of the end of last year, 5,815,006 FHA mortgage insurance policies were outstanding on $750.3 billion in mortgages, higher than 5,721,487 loans for $733.6 billion at the end of November. At the end of 2008, mortgage insurance was in force on 4,681,291 loans for $533.1 billion.

FHA delinquency of at least 90 days climbed to 9.1 percent on Dec. 31 from 8.9 percent a month earlier and 6.8 percent a year earlier.

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