FHA Watch, August 2012

Article Highlights

  • FHA's capital position worsens...again.

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  • One in six FHA loans continued to be delinquent in July.

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  • FHA serious delinquency rate up to 9.51%.

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This Issue's Highlight

FHA Watch, No. 8, August 2012

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FHA’s Financial Condition Worsens; Denial Dial Once Again Reset to Lowest Level Ever

One in six Federal Housing Administration (FHA) loans continued to be delinquent in July as the total delinquency rate eased slightly to 16.52 percent. This was due to a modest decline in thirty-day delinquencies, offset somewhat by an increase in sixty-day plus delinquencies. The serious delinquency rate ticked up to 9.51 percent.

In July, the FHA had an estimated current net worth of –$24.44 billion and a capital shortfall of $44–63 billion. The FHA’s estimated net worth on a generally accepted accounting principles (GAAP) basis has declined by $7 billion since the end of FY 2011. This decline appears to be in line with a recent FHA projection that it may end FY 2012 with $3 billion in reserves, not the $11.5 billion it projected in its FY 2011 Actuarial Report. 

As a result of these data, the Denial Dial has been reset to –2.27 percent, eclipsing the previous low set in June 2012.

This Month’s Features

Note from the Editor: The August issue of FHA Watch will be limited to updating the monthly features only while we work on analyzing the impact of FHA lending practices on our communities.

Spotlight on Insolvency
FHA’s Estimated Net Worth Continues Sharp Decline to –$24.44 Billion, with a Capital Shortfall of $44–63 Billion

Spotlight on Delinquency
One in Six FHA Loans Delinquent in July, and Serious Delinquency Rate Ticks Up to 9.51 Percent

Spotlight on Best Price Execution
Government Mortgage Complex’s Ginnie Brands Improve Further on Their Pricing Dominance over Fannie Mae

The Road Map to FHA Reform
Specific Steps to Reform and the Status of Each

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Edward J.
Pinto

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