Observations on FHA Delinquencies – July 2020

The Federal Housing Administration (FHA) released its July 2020 Credit Risk Report.  The overall non-seasonally adjusted rate of seriously delinquent (SDQ) loans increased from 8.97 percent in June 2020 to 10.58 percent in July 2020.  This increase is lower than the increase from May 2020 to June 2020, when SDQ rate increased by 83 percent from 4.91 percent to 8.97 percent.

Below are some observations on FHA’s SDQ portfolio of loans as of July 2020:

  • Number of SDQ Loans: There are about 850,000 seriously delinquent loans as of July 31st.
  • Origination: About fifty percent of the SDQ loans originated in 2015 or earlier, while the remaining fifty percent originated between 2016 and 2020.
  • Credit Score: Approximately 703,000 of the SDQ loans have a credit score. Of those, about 84 percent have a credit score of 620 or higher.
  • Loan Amount:  Approximately one in four of the SDQ loans had a loan origination amount of greater than $250,000.
  • Expectation for August SDQ Loans:  Based on the 30-days and 60-days delinquency rates, we expect that August 2020 SDQ rate will see another moderate increase by 1 to 2 percent.