February FHA Delinquency Report

How high will the serious delinquency watermark be?

The last three months have shown massive increases in the serious delinquency rates for FHA loans in GNMA mortgage backed securities (~7 out of the 8 million outstanding FHAs, and much better performing than the 1 million that are not). This was completely expected as a mechanical effect of the tightening of the loss mitigation procedures and the end to endless partial claims and loan modifications.

I expected that January would be the high water mark for delinquency and serious delinquency rates since partial claims and loan modifications that were started in October could complete their 3 required trial payments for the partial claim/mod, hit the data as “cured” loans and bring the DLQ and SDLQ rates back down. But………. that assumes the borrower was able to successfully make their 3 required payments. What does the February data have to say about that?