FHA Loan Applications Surge in March

FHA mortgage applicationsrnrose dramatically in March to a total of 246,406 compared to 165,239 inrnFebruary, an increase of 68 percent.

Over two-thirds of the applications, 163,467, were for the purpose ofrnpurchasing a home while 75,541 were requests for refinancing. 7,398 werernapplications for Home Equity Conversion Mortgages (HECMs) or reverse mortgages.  In February those numbers were 97,171, 51,425,rnand 6,643 respectively.

The figures were containedrnin the monthly FHA Outlook released by the Department of Housing and UrbanrnDevelopment yesterday Morning.  The reportrnrevised the annualized application rate upward from 2.01 million in the lastrnreport to 2.38 million based on the March figures.

The rise in applicationsrnwas believed to reflect the upcoming expiration of the $8,000 tax credit forrnfirst time buyers and $6,500 credit available to “move-up” homebuyers.  A sales contract must be in place by the endrnof April and the entire sale finalized by June 30 for homebuyers to qualify forrnthe credit.  The surge in applications,rnespecially during the last week of the month, may also reflect a race to obtainrna mortgage before the increase in the FHA up-front premium which took effect onrnApril 5.

FHA endorsed 132,301rnmortgages for insurance during March; a total dollar value of 24.1 billion,rncompared to 131,978 and $24.4 billion in February.  March endorsements included 82,879 purchasernmoney mortgages, 43,600 refinanced mortgages, and 5,822 reverse mortgages. Ofrnthe refinances, 28,596 were conventional to FHA and 15,003 were prior FHArnmortgages. 10,695 of the refinances were cash out, 24.5 percent of the total.

Endorsements for FY2010 torndate total 935,349 ($171.1 billion) compared to 867,749 ($158.2 billion) at thernsame time in FY 2009. Purchases account for 550,885 or 58.9 percent of thosernendorsements compared to 444,078 or 51.2 percent during the similar period lastrnyear. FHA is projecting a total of 1.875 endorsements for the entire year. Torndate 81.4 percent of FHA endorsements have been for first-time buyers, up fromrn77.4 percent during the similar period in 2009.

Thus far in FY2010 FHA hasrnrefinanced 339,215 properties, down from 365,782 during the same period lastrnyear. 164,185 of these were refinanced from other FHA mortgages while 175,028 werernconventional to FHA refinances. Cash-out mortgages represent 18.9 percent ofrnrefinances thus far in FY2010 compared to 24.6 percent one year earlier. 

In March the averagernprocessing time for all mortgages from application to endorsement was 11.1rnweeks and 88 percent were accepted and endorsed using the FHA scorecard (TOTAL).rnThe weighted average FICO score for FHA mortgages in March was 697.

At the end of March FHA hadrn6,114,452 mortgages outstanding with an unpaid principal balance of $805.6rnbillion. One year ago there were 4,904,167 FHA mortgages on the books with anrnunpaid balance of $577.2 billion.  Thisrnis an increase of nearly 25 percent in the number of FHA loans and almost a 40rnpercent increase in the portfolio value.

Delinquencies in FHA loansrndeclined slightly in March from 553,929 to 536,858. The delinquency rate wasrndown from 9.2 percent in February to 8.8 percent at the end of March.

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