September 19, 2021

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Mortgage News

10 Most-Threatened Metros Based on FHA Delinquency Rates

foreclosureIndustry experts are keeping a close eye on crime rates as the US economy emerges from a pandemic-induced recession and an end to leniency programs looms large in the not-too-distant horizon. The experts at the AEI Housing Center, which provides market forecasts and studies, recently announced published a report Coverage of February dates and exposure of the 10 metros most at risk of high numbers of arrears.

While Atlanta and Houston are the major cities at risk from FHA crime rates, increased FHA crime rates threaten homeowners and neighborhoods in numerous other metropolitan areas in the country.

The proportion of FHA loans in February and loans with serious crime is higher than in the previous month, “said Edward Pinto and Tobias Peter from AEI.” Of the FHA’s roughly 8 million outstanding loans in February, 17.5% were criminals and 12.0% were serious criminals, as reported on FHA Neighborhood Watch (including leniency loans). “

The authors say that at the end of the Forbearance Period, one of two things will happen:

“Those borrowers who are able to resume normal payments may choose to have arrears on hold until the loan is repaid, which would cause those loans to become current. Borrowers who are unable to resuming normal payments or those who fail to do so will be in default. “

Hence, overall crime is likely to decrease as serious crimes that are more than 90 days past due are likely to remain high.

Those borrowers who remain serious criminals will have to sell their homes or face foreclosure. The experts conclude that we could see zip codes as a buyer market form with strong FHA and other high risk credit activity.

Homeowners living in these higher risk mortgage markets tend to have lower incomes and are largely minority groups.

Readers can download FHA foreclosure rates for the 169 largest metros or examine the concentration of FHA loans in their areas of interest Here.