FHA Business Trends

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FHA Business Trends

• Industry Briefing
• Wednesday, January 14, 2009

Charles A. Capone, Jr. Deputy Director Acting
Director Office of Evaluation
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We are All in Uncharted Waters
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The Housing Market

• New Home Starts are at their lowest level in 50
  years.
• According to NAR, up to 40 percent of existing
  home sales are distress sales.
• Some analysts are viewing two distinct housing
  markets, each with its own dynamic distressed
  properties and non-distressed properties.
• Housing markets are struggling to find bottom in
  many areas of the country.
• Triple whammy market correction for the excesses
  of 2002-2006 credit crisis economic recession.

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FHAs Role in the Mortgage Market

• The FHA-insured share of all home purchases has
  been above 17 percent since July.
• It has not been this high since 1990.
• The FHA share of new home sales is 24 percent.
• FHAs mortgage market share is somewhere between
  25 and 30 percent, based on dollar volumes.
• In 2006 it was around 2 percent.

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Source US Department of HUD Data from HUD,
National Association of Realtors, and the US
Bureau of the Census.
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(No Transcript)
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FHA is Monitoring Changes in its Portfolio
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Conventional Refinance Loan Applications Now
Outnumber Purchase Loan Applications
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Stronger Loans are Coming into the Portfolio
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Default Rates are Starting to Rise
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Unknowns for FHA Today
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Whether Jumbo Originations will Increase in the
New Year
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Whether Insurance Claims will Rise According to
Actuarial Projections
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Other Factors to Watch

• How long it will be until the national housing
  market will turn the corner.
• How long it will be until private mortgage
  insurers can return to normal underwriting and
  pricing.
• Some members of the House of Representatives
  continue to press for reinstating seller-funded
  downpayment assistance programs.