This Issue’s Highlight
Overall delinquency rate surges in September; Denial Dial plunges to record low
In September, 17.3 percent of all Federal Housing Administration (FHA) loans were delinquent, up from 16.35 percent in August 2012 and 16.78 percent in September 2011. Total delinquencies increased by 77,000 over August, the largest one-month increase since FHA Watch began tracking monthly delinquencies in September 2011.
The September estimate of the FHA’s generally accepted accounting principles (GAAP) net worth is –$28.3 billion, down from –$16.3 billion and –$26.3 billion in September 2011 and August 2012, respectively. The capital shortfall stands at $48 billion (using a 2 percent capital ratio) and $67 billion (using a 4 percent capital ratio). The Denial Dial was reset to −2.61 percent, eclipsing the previous low set in August 2012. The FHA’s estimated net worth on a GAAP basis has declined by $12 billion since the end of FY 2011.
The Denial Dial’s decline is largely the result of a surge in 60-day-plus delinquencies, a growing liability for upfront premiums and continued monthly losses in excess of monthly cash flow.
The month’s features:
Homing in on the FHA’s problems
Do the FHA’s Flawed Pricing and Underwriting Policies Finance Failure?
Spotlight on insolvency
FHA’s Estimated Net Worth Declines Sharply to –$28.3 Billion, with a Capital Shortfall of $48–67 Billion
Spotlight on delinquency
Overall and Short-Term Delinquency Rates Soar
Spotlight on best price execution
Ginnie Brands Continue Their Pricing Dominance
The road map to FHA reform
Specific Steps to Reform and the Status of Each