FHA Mortgage Guide

Anyone notice something curious about the chart below? It comes from the latest foreclosure and delinquency study produced by the Mortgage Bankers Association and it shows that foreclosed government loans — FHA and VA financing — have little impact on national foreclosure levels.

How come? For the most obvious reasons.

You can’t get an FHA or VA loans with a stated-income loan applications — a liar loan.

You will never face a prepayment penalty with an FHA or VA mortgage, so they’re easy to refinance if you can get better terms.

There are no insane re-sets with either FHA or VA loans.

However, as good as these numbers are, they could be better. The FHA ARM program used to have annual caps of 1 percent per year and 5 percent over the life of the loan. Lenders pushed the FHA to make a “technical” change that raised the caps to 2/6. That means rates rise faster for FHA loans than they did before, something which surely hurts affordability and the FHA’s core mission.

More of the MBA release is below:

Delinquencies and Foreclosures Increase in Latest MBA National Delinquency Survey

WASHINGTON, D.C. (December 6, 2007) - The delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 5.59 percent of all loans outstanding in the third quarter of 2007 on a seasonally adjusted (SA) basis, up 47 basis points from the second quarter of 2007, and up 92 basis points from one year ago, according to MBA’s National Delinquency Survey.

The delinquency rate does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process was 1.69 percent of all loans outstanding at the end of the third quarter, an increase of 29 basis points from the second quarter of 2007 and 64 basis points from one year ago.

The rate of loans entering the foreclosure process was 0.78 percent on a seasonally adjusted basis, 13 basis points higher than the previous quarter and up 32 basis points from one year ago.

The total delinquency rate is the highest in the MBA survey since 1986. The rate of foreclosure starts and the percent of loans in the process of foreclosure are at the highest levels ever.

The increase in foreclosure starts was due to increases for all loan types. From the previous quarter, prime fixed rate loan foreclosure starts increased 4 basis points to 0.22 percent, prime ARM foreclosure starts increased 40 basis points to 1.02 percent, subprime fixed foreclosure starts increased 3 basis points to 1.38 percent, subprime ARM foreclosure starts increased 88 basis points to 4.72 percent, and FHA foreclosure starts increased 16 basis points to 0.95 percent.

Since the third quarter of 2006, the foreclosure start rates for prime ARMs increased from 0.30 percent to 1.02 percent and the rate for subprime ARMs increased from 2.19 percent to 4.72 percent. The foreclosure starts rate for prime fixed loans increased from 0.13 percent to 0.22 percent and the rate for subprime fixed loans have increased from 0.97 percent to 1.38 percent.

Check out these FHA resources for more information

This entry was posted on Sunday, December 9th, 2007 at 3:26 pm and is filed under FHA, FHASecure. 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.