Government-insured home loans in July soared to 29.1% of all home loan applications, up from 8.4% just 12 months earlier, reports the Mortgage Bankers Association.
Although the share of applications that are government-insured has been increasing since February 2007 — the beginning of the mortgage implosion — the MBA says it didn’t start showing significant increases until this year.
In the 18 years the MBA has been tracking applications, the lowest share of government-insured loans was in August 2005, when they dipped to 5.8% of all mortgages. The highest was in February 1990 when 43.8% of applications were government-insured.
Here are some of the reasons the MBA says government-insured mortgage applications are up:
- The Economic Stimulus Act of 2008 temporarily raised the Federal Housing Administration (FHA) and conforming loan limits for most areas in the country, which broadened FHA financing for more borrowers. The passage of the Housing Bill in July 2008 made these higher loan limits permanent.
- Data from the U.S. Department of Housing and Urban Development show that the level of conventional to FHA refinance applications increased 317% on a year over year basis in July, the bulk of which is likely from subprime ARM products.
- The level of conventional to FHA refinance endorsements has increased 260.8% on a year over year basis. Based on the MBA survey, application volume for government-insured loans was up 133.9% in July from a year ago, while application volume for conventional loans was down 50.2%, evidence of a shift from conventional to government-insured mortgages.
- FHA loans typically have lower down payments than those offered by Fannie Mae and Freddie Mac. Generally the maximum loan to value ratio for FHA loans is 97% and 95% for the Government Sponsored Enterprises (GSEs).
- Conventional GSE loans typically have higher credit score requirements than FHA loans.
- The higher application and endorsement activity for government-insured loans highlights the need for FHA modernization.
For other mortgage news…
- The man who caused 10 foreclosures
- Banks offer 28% discount to O.C. foreclosure shoppers
- Local bank keeps delinquencies low, deposits high
- Blogger discusses housing market and new book on TV
- CA to get $105 million for housing
- How much to put down and other mortgage answers
- Key O.C. mortgage rate highest in 11 months
- O.C. bank-owned properties rise 37%
These are the only loans people can get now. This is no suprise. Just more money that I have to spend as a tax player later. Lame!!
… an increased production rate which will BURY FHA with gagging loss Matt, just as soon as the land-slide of claims begin rolling in! WHY? Because historically FHA Lenders and their few closely tied correspondents were all closely monitored and actually knew pretty much what they were doing for the most part … BUT today (kinda like your book Matt there’s a back-story), every Tom, Dick, & Harry Mortgage Broker and LO have left subprime an raced to FHA where they are unlawfully originating FHA transactions (being illegially compensated) and getting them into the FHA system one way or another via a wide variety of “tricks” promoted by a lot of people to hook their production (sound familar Matt? - get ready for another book about the collaspe of FHA in a couple of years) … remember this comment Matt, and now you’ll see the EXPLOSION coming … just like I did several years ago with subprime.
Look - I’ve posted this a few dozen times so far. Value is the key ingredient in a Mortgage Loan!!!!!!! If your value is good, the loan will get paid…….. Why do people in OC want to blame lending for making the values drop????? Its just the opposite, its the lending that made your values rise!!!!!!!!! FHA borrowers need to have the ability to pay the loan, unlike that guy that bought the house next to you for $850k when you bought it for $250k 5 years ealier. You should have sold!!!!!!!!!!
How do they dare? Don’t they know we want everything to crash so we can become homeowners? I predict the prices are going back to 1997 level. They have to because that’s the only way I can afford it. At least I am being honest !