On the Road Again

Government lending is the only game in town.That fact was underlined by the agenda at the recent New England Mortgage Bankers Conference I went to in Providence, RI. All the energy seemed directed at the federal agencies, with sessions featuring speakers from Fannie Mae, Freddie Mac, the Federal Housing Finance agency, and the Federal Housing Administration. (Throw in the Veterans Administration and the Rural Housing Service for good measure!)When I cover government regulators, I tend to concentrate on the hard numbers they provide, not the poetry and finesse they tend to indulge in when generalizing. Luckily, at NEMBC, there was a fair amount of hard data.This was especially true for FHA, which had closed out its fiscal year the day before its presentation and thus had a big number it could talk about.FHA is starting a new fiscal year with a high target to shoot for-two million loans insured during FY 2009, making it the agency's best year ever.That's more volume than FHA did for calendar 2005, 2006 and 2007 combined.Gerald Glavey, director of processing and underwriting at the Department of Housing and Urban Development, told NEMBC that a good year for the insurer would be about one million loans.Mr. Glavey said the agency now has 25% of the country's mortgage market, up from 3% a few years ago, and that it has an 80% share for first time home buyers.FHA borrowers' FICO scores now average 693, he said, up from 633 two years ago. Then, nearly half of FHA borrowers had FICO scores under 620. Now, just 7.5% do.For calendar 2008, FHA insured nearly 1.5 million loans, more than double the 580,000 it did in 2007. In 2006, volume was just above 500,000 loans, and in 2005, 523,000 mortgages.According to data Mr. Glavey gave the mortgage bankers, FHA's reverse mortgage program insured 115,000 Home Equity Conversion Mortgages in 2008, more than double the 48,000 it did in 2005.The agency insured 810,000 purchase mortgages last year, and 542,000 refinancings, of which 431,000 were originally non-FHA loans.The 2008 refis were more than the agency did for 2005, 2006 and 2007 combined.Iliana F. Ghanen, vice president of community lending for Freddie Mac, also had some hard numbers to give the mortgage bankers.She said her agency had purchased $319 billion in mortgages in January through June of this year-compared to $460 billion for all of 2008. And its refi program racked up $3.8 billion in total savings, or an average of $2700 per family.The average loan-to-value ratio at Freddie now stands at 65%, she said, and the average FICO at 760.Freddie has doubled its call center staff, to handle 2,000 calls a day, she said, and it has boosted its in-house servicing staff by 60%.Jennifer Whip, vice president of single-family marketing, Fannie Mae, noted her agency has handled 1.7 million refis this year -- a near-record number. And she said its 60,000 properties currently in foreclosure is a record for Fannie.The defect rate has been increasing at Fannie since 2003, rising to 8% on books of business originated in 2007 and early 2008.Fannie's Delegated Underwriter technology is due for an update in December, and Whip said there will be several important changes, like increasing minimum FICOs to 620 from 580, and decreasing the debt to income ratio from 45%.