Mortgage Monday: This Just In…

FHA squeezed, but still in the game

By Kenneth R. Harney

Syndicated columnist

WASHINGTON — Is the Federal Housing Administration losing some of its post-boom, post-bust oomph? Is the Obama administration’s plan to gradually throttle back the FHA’s home-mortgage-insurance volume already having effects — and if so, what might this mean to you as a buyer?

There are definitely signs that something’s brewing:

• Total applications for FHA-insured single-family mortgages are down 30 percent year-to-year through March, according to the agency’s data. Applications from prospective purchasers are down 35 percent. The FHA’s popularity with buyers previously had sustained its high origination volumes.

• The FHA put its second increase in premium charges in six months into effect April 18. Higher premiums mean higher monthly payment requirements for buyers, and could have the effect of squeezing some consumers with tight budgets out of the market entirely.

• The private-mortgage-insurance industry, which competes with the FHA for borrowers who make low down payments, is touting its newly resurgent conventional mortgage products, which may offer significant monthly savings when compared with the FHA.

• Some of the agency’s long-standing advocates wonder aloud whether the administration’s tilt toward more private-sector involvement in the mortgage arena may be hurting first-time buyers who can’t bring large cash resources or high credit scores to the table.


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