WASHINGTON The Federal Housing Administration warned lenders that processing of new case numbers during peak hours may be slower than normal due an expected surge in demand and now it appears its prediction has come true.
The demand for case numbers on Monday was having an effect on processing, analysts said.
“FHA is sensitive to loan closings this week offering to handle those requests on a priority basis,” said Brian Chappelle, a mortgage consultant and co-founder of Potomac Partners who’s previously served in roles with both the FHA and Mortgage Bankers Association.
“Where they can usually get 12 case numbers per hour, it is running at 6 or roughly 50%.”
Lenders were canceling case numbers following the Jan. 8 announcement by Department of Housing and Urban Development Secretary Julian Castro that FHA would reduce its 135 basis points annual mortgage insurance premium by 50 bps starting Jan. 26.
Now lenders want new case numbers so their clients can benefit from the lower premium. FHA officials warned lenders about processing delays last Friday.
“Due to the expected high volume of case number assignments beginning Monday, January 26, 2015, lenders may experience slower than normal processing times. FHA Connection peak times are between 11:00 AM and 3:00 PM (ET),” FHA said in Jan. 23 notice to lenders.
Still, “while the system was running slow during peak hours, complaints have been less than we expected,” Chappelle said. “I think FHA’s systems are clearly in better shape than many people think.”