tag:www.guidemehome2southeasternwisconsinlakearealiving.com,2012:/2010/6/10/are-fha-delinquencies-going-down/comments Mephisto Drax 2010-08-05T12:11:42Z Krista Railey tag:www.guidemehome2southeasternwisconsinlakearealiving.com,2010-06-10:7715:7956 2010-06-22T23:45:02Z 2010-06-22T23:45:02Z Loved the analogy and analysis. I will add that while there was a slight decline to April 90 day delinquencies, there were increases to the 30 and 60 day delinquencies and foreclosures. On a whole, the number of FHA delinquencies and defaults increased in April. As to the so-called default trend slowing, it is important to point out that in April 2009, there were 376,924 FHA loans that were seriously delinquent (90 days + late). In April of 2010, there were an astounding 553,028 loans that were seriously delinquent. According to my math, that is an increase of over 46%. Hardly what I would consider a lower trend. FHA and various agencies love to dazzle us with statistics without mention of the impact of dilution caused by new loan origination. The default and delinquency rates have been diluted due to new loan originations. Although FHA has been successful thus far at outrunning the default rates through high volume, the number of defaults have, for the most part, steadily increased. The reality is the FHA/HUD can't outrun them forever. I will, however, acknowledge that the number of 30, 60, and 90 day delinquencies did decrease in February and March 2010, reporting of special codes for FHA-HAMP related actions became mandatory. Although the number of FHA-HAMP related actions are supposed to be reported on HUD Neighborhood Watch, only a small handful of FHA-HAMP actions are showing on HUD Neighborhood Watch. Since FHA Commissioner Stevens claims there have been thousands of trial modifications extended, and May only showed 205 FHA-HAMP related actions, it raises the question of whether FHA-HAMP is temporarily skewing default statistics. The reality is that despite the so-called mortgage industry reform, HUD has still not revised FHA TOTAL Scorecard which is used by lenders to assess loans. FHA TOTAL Scorecard is famous for generating approval recommendations on loans with debt-to-income ratios exceeding 50% and layering of underwriting flexibilities. I have a slew of AUS/FHA TOTAL Scorecard findings which are clearly not investment quality. As a prior underwriter, and industry professional with over 20 years experience- I know underwriting and I know risk. As to those who insist that housing prices have stabilized, I openly laugh in their face. Rates can't go much lower, and are already out of alignment with risk. Furthermore, debt-to-income ratios are eventually going to have to be reigned considering that even borrowers with reasonable debt ratios are having a hard time making ends meet in this inflationary environment. Food inflation, tax increases, insurance increases, interest rate increases ad infinitum are piling up on the American consumer. The math says that housing deflation is not only inevitable- its a good thing. Again, good article and mindset.