FHA Loan Production Dips Slightly
Recent government reports indicated that FHA mortgage loan origination dropped 3% in May from April’s volume. FHA lenders originated $22.3 billion of FHA loans for single-family homes in May. Almost 72% of the 124,750 FHA loan approvals went to borrowers buying a home. Of the 30,900 FHA refinance loans in May, 68% were conventional loan transactions with borrowers putting only 3.5% down-payments which are the minimum FHA requirements for home purchase transactions. The Federal Housing Administration indicated that 8.42% of its insured FHA loans are 90 days or more past due which almost the same as the 8.49% reported in April.
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Many FHA loan companies are concerned that FHA guidelines could tighten more because of the FHA loan defaults. Many insiders are predicting that HUD will increase the down-payment requirements from 3.5% to 5%. This will make it tougher for many consumers to get approved for FHA financing but it may reduce loan defaults that put the FHA mortgage programs at risk.
The government report also noted the lack of volume for the Hope for Homeowners programs that has helped very few borrowers qualify for FHA refinancing. FHA mortgage rates remain at record lows but the pool of borrowers who qualify for FHA refinancing has clearly been reduced.
