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This growing inventory pushed up FHA's serious delinquency rate (90-days or more past due) by 19 basis
points during the second half to 8.78% as of Dec. 31.
FHA has investigated foreclosure processing problems facing its servicers, but the Department of
Housing and Urban Development (HUD) has held back from taking enforcement actions against firms
while negotiations over a global servicing settlement are on-going.
Meanwhile, the quarterly report shows the quality of newly originated FHA loans continues to improve
in terms of credit scores and loan-to-value ratios.
"For the first time since FHA began to require that lenders report credit scores (May 2004), more than
60 % of loans endorsed in the quarter were made to borrowers with credit scores of 680," the federal
mortgage insurer said. FHA endorsed 371,300 mortgages in the yearend quarter.
FHA also experienced a high level of prepayments (163,000) but 109,000 of those (67%) were refinanced
back into other FHA products.
Due to a 25 basis point hike in annual premiums back in October, these FHA-to-FHA refinanced loans will
"contribute more revenues to the Mutual Mortgage Insurance Fund over time than was expected," the
quarterly report says.
Another 25 basis point hike on newly originated loans is slated for April 18 to "further strengthen FHA's
capital reserves," HUD said.