FHA SF Production Drop Slowing

Federal Housing Administration endorsements of single-family loans fell only 9.7% in fiscal year 2006 after a precipitous 44% drop in fiscal 2005.Despite the decline, FHA production increased in dollar terms. The FHA insured 501,984 single-family loans in fiscal 2006, compared with 555,557 loans the previous fiscal year. In dollar terms, FHA production totaled $72.8 billion in the fiscal year that ended Sept. 30, compared with $62.3 billion in fiscal 2005. Department of Housing and Urban Development officials say they believe they have stabilized the FHA's market share by implementing administration changes to align the FHA's practices with conventional lending practices. HUD also is backing FHA modernization legislation that has passed the House but has run into opposition in the Senate. "I think they have stopped the bleeding," said Bud Carter, an FHA consultant with Potomac Partners in Washington. "Whether they can come back is still up in the air. They really need the legislation to make a difference."