Aaron Dickinson (blogger, real estate agent, stat-junkie) hoists a report showing that FHA insured home loans were used in 40% of Twin Cities purchases in 2009. That’s not only surprising, but something approaching double higher than the national average, for those *keeping track.
It’s also timely, since just today the Wall Street Journal has up a lengthy piece on the travails of FHA, which as a result of tighter credit and the near-extinction of private credit, has been thrust into a role as a primary backstop and support for the housing finance market, insuring 25% of all mortgages nationally in 2009.
Loan losses for FHA have predictably ballooned, and the FHA is looking to clean things up, from the WSJ:
Souring FHA-insured mortgages are threatening the agency’s finances. Congress is pressuring him to tighten the easy-money standards that once helped people like him, and he is expected to announce revisions as early as this week.
It’s a delicate game – ratchet things down too far, and FHA risks pulling the rug out from under an on-the-mend real estate market. Don’t do enough, and FHA will eventually need a bailout. Neither are appealing options, and this is an issue that bears watching in 2010.
*Update: Quick note of clarification. The data cited in the WSJ concerns ALL mortgages, while the local data is purchase money only. It may very well be that after the WSJ data is broken out by purchase vs refinance, our 37-40% FHA market share could be close to the national average, especially in similarly priced markets. I didn’t check because I do not have ready access to stats that granular for FHA mortgages, and haven’t done the requisite digging.
· Souring Mortgages, Weak Market, Force FHA to Walk Tightrope
[WSJ - 1/19/2010]
· FHA Loans Make up 40% of Sales in 2009
[Aaron Dickinson - 1/19/2010]