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February 15, 2017

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Home Mortgage Delinquencies Jump

by Bob Schwartz

FHA Home Mortgage Delinquencies Jump

San Diego Residential Property Outlook - Home Mortgage Delinquencies Jump

Just reported that in the fourth quarter of 2016 the Federal Housing Authority reported that home mortgage delinquencies increased for the first time since 2006. It should be kept in mind that this home mortgage delinquency jump comes at a time when the FHA was seeing the lowest home mortgage delinquency rates  since 1997!

It’s fair to say that the majority of economists were surprised by this home mortgage delinquency junp. Naturally, it’s way too soon to determine if this is just a blip or the start of an ominous trend.

Unfortunately with the strong housing market recovery over the last few years, first-time homebuyers have been pretty much sidelined because of the speed of the housing recovery, the current high housing costs, very low housing resale inventory, tighter mortgage qualifying and a rising mortgage rate environment.

The FHA insures loans but does not make mortgage loans. Because of the FHA insurance buyers can typically put down is little as 3 1/2% of the purchase price of their new home. many real estate insiders credit the FHA program as keeping the housing market alive during the recent bust. Actually, maintaining the FHA program  during the housing bust came at a high cost to taxpayers as the FHA needed $1.7 billion added to its reserve from the U.S. Treasury.

Just before the Trump inauguration, President Obama’s appointed head of HUD announced cuts in the FHA mortgage costs. These proposed FHA lowered cost were justified by the HUD secretary’s  claim  that the FHA had built back its reserves and was on solid footing. As soon as President Trump took office, he ordered a hold on these FHA cost cuts until they could be better evaluated. Now, in light of this FHA delinquency jump, it seems that Pres. Trump made a good call by holding off the lowering of the FHA loan cost requirements.

Click here for further information about the Federal Housing Administration (FHA)

 

Home Mortgage Delinquencies Jump

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4 Comments
  1. Feb 19 2017

    Does that mean, we will have a massive REO sales again?

  2. Feb 19 2017

    Maria,
    Actually, it may mean nothing at all just a blimp in the statistics.personally I think it’s just a reason to keep an eye out and see how the future monthly indicators pan out.

  3. One of the most informative articles I have ever read.

  4. Feb 25 2017

    I do love coming to this site!

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