Are FHA Delinquencies Going Down?
The Wall Street Journal reported on Monday that the FHA delinquency rate was slowing over the 2009 trend. They reported that only 8.5% of the loans in April were 90 days late vs. a high of 9.4% in January of this year. That is a lot like saying that last year our favorite sports team improving its record of losing 10 of the 11 games played vs. all 11 games lost the year before. The bottom line is the team still stinks. The housing market will continue to suffer due to a few fundamental factors.
First, low down payment loans are always risky. FHA has raised the threshold for the minimum credit score to obtain a FHA backed loan to 660 but buyers with stellar credit and little to no down payment will still walk away from the house IF they find themselves in difficult financial times, i.e. a job loss. The lenders of non FHA loans have tightened their standards and requirements for a loan much to the consternation of us in the Real Estate industry, but those buyers are less likely to default since they have lots of their own money into the home.
The second fundamental reason we have a troubled Real Estate economy, is that employers are still less likely to add to their ranks. Once job hiring becomes a routine event then this confidence will quickly move into the housing sector and we will see more than a glimpse of good news it will be here. But in this time of good news and bad news there is one thing we can do and that is to clearly look at the housing market with an unbiased view. Then and only then can we make really good decisions. For home owners who want to sell this is a good time. Yes you will sell your home for less than you thought, but you will also be buying for less too AND interest rates are so low that it seem silly not to make the move. We have seen an uptick in activity. Guess what? There is no tax credit. Savvy sellers know that they can sell their home now and buy a bigger or better home or for that matter downsize and do it all for less.
Posted by: 
Glenn Hanon
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In Wednesday’s edition of the Wall Street Journal the paper pointed to an ominous sign on the horizon with respect to foreclosures across the United States. You can read the full article 
