2007 A Banner Year For FHA Mortgages

by Peter G. Miller
October 18th, 2007

The FHA continues to show strong demand even as much of the mortgage marketplace is in disarray.

For the fiscal year which ended September 30th, HUD reports that it received 768,770 FHA applications under the Single Family Programs. Of this total, 60,081 applications covered proposed construction and 708,689 existing home transactions.

From this application volume, FHA endorsed 424,779 forward mortgages and 107,558 reverse mortgages (HECMs) for a total of 532,337 loans for the year.

Of the 532,337 mortgages insured during this fiscal year, 278,422 were for purchase money mortgages, 146,357 refinances and 107,558 HECM’s. Eighty percent of the purchase money mortgages were insured for first-time home owners and of these, 31.2 percent of the home owners were from minority families. The remaining were white households. Only 4.2 percent of the home buyers refused to disclose their race or ethnicity.

With respect to refinanced deals, only a small portion of the cases could use the streamlined procedures, since most transaction required appraisals. The bulk of these cases required full underwriting because of the major shift in business especially in cash-out activity — a significant number transferring from a conventional transaction to FHA. This is partially due to change in FHA regulations which permitted loan-value ratios of 95 percent — up from the prior limit of 85 79 percent — changed in October 2005.

FY 2007 was a year of shifting business. Purchase transaction were off 11.3 percent and first time home buyer mortgages were down 12 percent. However, the refinancing sector was much more active — a further breakdown shows that streamlined processing was down 39.3 percent while full processing was up 65.4 percent. This is due to the shift in the source of refinancing.

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This entry was posted on Thursday, October 18th, 2007 at 11:19 am and is filed under , . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Responses to “2007 A Banner Year For FHA Mortgages”

  1. Mike C Says:

    Does the new FHA reform bill remodify the obligations for approved brokers such as the audited financials which cost in the thousands of dollars each year?
    Thank you,

  2. Peter G. Miller Says:

    Mike –

    I don’t have an answer. Alternatively, there’s no final language for FHA reform so what will happen is anyone’s guess.

    My general sense is that there is no interest in reducing any standards which increase HUD’s level of risk.

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