June 13, 2024

FHA Lending Plunges By 39% Through May As Default Rate Exceeds 8%

The recently released Single-Family Outlook from the FHA shows a steep drop in FHA applications through May 2011.  According to the FHA the estimated rate of annual applications plunged by 39% from a year ago and down 21% from April.  The FHA estimates that total applications for mortgage loans this year will be 1.3 million.

A total of 118,784 applications were accepted in May, comprised of 79,931 purchase transactions, 31,380 refinances and 7,473 Home Equity Conversion Mortgages.

The FHA insured 95,907 single family mortgages in May valued at $16.9 billion.  Of the total May mortgages, 66,475 were purchases, of which 51,236 were for first time home buyers.  Out of a total of 24,244 refinances in May, only 19% were cash out refinances.

The FHA continues to experience a high rate of mortgage defaults.  As of the end of May, there were 578,933 mortgages that were in bankruptcy, foreclosure or more than 90 days past due.  The default rate on FHA mortgages totaled 8.17%, about the same as the previous month.  Loss payouts by the FHA rose almost 28% from a year ago to 226,671 claims.

The FHA has more than 7 million mortgages totaling $985 billion.  Of the total mortgages in force approximately 70% were for home purchases.