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Michigan Credit Union League Home » Information Services » Publications » News Articles  

FHA-backed loans show big increase   (Misc News: September 21, 2010)

Consumers' reliance on FHA-backed loans increased significantly over the last three years, a consequence of the Great Recession.

The Federal Financial Institutions Examination Council said data collected under the Home Mortgage Disclosure Act shows that the FHA's share of first-lien loans increased from 7 percent in 2007 to 26 percent in 2008 and to 37 percent in 2009. First-lien lending for home purchases backed by Veterans Administration (VA) guarantees also increased markedly, jumping from 2.7 percent in 2007 to 4.9 percent in 2008 and 6.7 percent in 2009.

The data include was derived from 15 million applications (of which nearly 9 million resulted in loan originations) and 4.3 million loan purchases, for a total of 19.3 million actions. The data also include information on 210,000 requests for preapprovals that did not result in a loan, the FFIEC said.

The number of reporting institutions fell 3 percent from 2008, primarily because of a relatively large decline (about 13 percent from 2008) in the number of mortgage companies reporting data. The total number of originated loans of all types reported increased by about 1.8 million, or nearly 25 percent, from 2008, largely because of a 67 percent increase in refinancings.

FFIEC said there was a distinct discrepancy in denial rates among races. Blacks and Hispanic whites had notably higher gross denial rates than non-Hispanic whites in 2009. The pattern for Asians was somewhat different, as their gross denial rate was similar, for both home-purchase loans and refinance loans, to the corresponding gross denial rates for non-Hispanic whites. 

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