FHA-Backed Loans Hit Record

The Federal Housing Administration insured a record number of one- to four-family loans in the 2003 fiscal year that ended Sept. 30, according to preliminary FHA data."We have endorsed a record dollar volume of $177 million," topping the 2002 fiscal year record by 8%, John Weicher said in an interview. He noted that refinancings made up 48% of the FHA's business, which is unusually high. "A high proportion of people are refinancing on a streamlined basis with FHA," he said. At the same time, a lot of FHA borrowers refinanced into conventional loans. The FHA's portfolio shrank by 14% from 6.32 million loans in fiscal 2002 to 5.41 million loans as of Aug. 31. Meanwhile, the FHA default rate (loans 90 days or more past due) hit 5.76% in August, up a full percentage point from Sept. 30, 2002. Mr. Weicher said the economy has finally turned around, and he expects defaults will peak before the end of the year and start to come down. "I have seen the default pattern in a number of economic cycles and defaults tend to be a lagging economic indicator," the FHA commissioner said. "I think that is happening again." (To read more about the Weicher interview, see the Oct. 20 issue of National Mortgage News.)