FHA Volume Slow in July but Outstandings Surpass $1 Trillion

Mortgage & Real Estate

Demand for Federal Housing Administration single-family loans slowed in July with residential lenders originating just $16 billion of government-backed product.

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However, the funding numbers were just enough to push FHA’s outstanding mortgage insurance portfolio over the $1 trillion mark for the first time in the program’s history.

As of July 31, FHA insured $1.003 trillion of single-family loans — up 11% from a year ago.

The surge in demand for FHA products — following the 2008 meltdown of the subprime market — pushed the agency’s market share up to 30% this year from just 3% in 2006.

But it looks as though FHA has passed its peak in this economic cycle. Acting FHA commissioner Carol Galante told a congressional panel last week that FHA’s market share has fallen to 17%.

According to the monthly “FHA Single-Family Outlook” report, lenders originated $16.1 billion of FHA-insured single-family loans and reverse mortgages, a 9% decline from June.  

Overall, FHA originations are down 25% for the first 10 months of fiscal year 2011 (which ends Sept. 30), compared to the same period in FY 2010. 

So far, FHA has endorsed $202.5 billion in loans as of July 31, compared to $268.5 billion during the first 10 months in FY 2010.

FHA’s $1 trillion portfolio has a serious default rate of 8.3% with 599,000 loans that are 90 days or more past due.  A year ago, the serious default rate was 9.1%.

Daily Briefing | Monday, September 12, 2011

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