FHA Production Shows Signs of Stabilization

FHA single-family originations stabilized in March at the $22.7 billion level with the "seriously delinquent" ratio falling below 9% for the first time since November. The Federal Housing Administration reported that lenders originated $22.7 billion of FHA-insured loans in March, up slightly from the $22.3 billion funded in February. FHA monthly originations averaged $23.7 billion in the first quarter, compared to $28.8 billion in the fourth quarter. The government-backed product accounts for about 25% of all new fundings nationwide. Meanwhile, FHA reported that 8.8% of its insured single-family loans are 90 days or more past due, down from 9.17% in February and 9.4% in January. The drop in serious delinquencies may be signaling that FHA's $807 billion single-family portfolio has turned the corner, allowing its insurance fund to rebuild its depleted capital reserves. The positive news also might give Democratic members of the House Financial Services Committee more ammunition to shoot down GOP amendments to tighten FHA underwriting, including a hike in downpayments to 5% from the current 3.5% requirement. The committee is expected to vote on the amendments and approve a FHA reform bill late Tuesday afternoon.