Via Wolf Street

On one side, a land rush by a few hundred thousand home buyers. On the other, millions of homeowners delinquent on their mortgages. Here are the metros by FHA delinquency rate. Two top out at 27%.

By Wolf Richter for WOLF STREET.

The Federal Housing Administration (FHA) prides itself in insuring subprime mortgages with, as it says, “low down payments,” “low closing costs,” and “easy credit qualifying” – all true. Of its active portfolio of 8 million mortgages that it insures, 17% were delinquent in July, the highest rate in FHA history. In many metros, the delinquency rates of FHA mortgages are above 20%; and in two metros, the delinquency rates exceed 27%.

The delinquency rates include mortgages that were delinquent and then entered a forbearance agreement with the lender, where the lender agreed to not pursue its rights due to nonpayment of the mortgage. During the term of forbearance – six months, under the CARES Act, extendable by another six months – the borrower isn’t making payments, but the missed interest and principal payments are added to the mortgage balance and will need to be paid somehow.

A FICO credit score below 620 is considered “subprime.” The FHA insures mortgages of borrowers with credit scores well below that.

  • If the borrower has a credit score of at least 580, the FHA will accept down payments of only 3.5%.
  • If the FICO score is below 580, no problem, but then down payment is 10%.

Many of the people whose mortgages the FHA insures have lost their jobs or had had their hours or work reduced.

In terms of the lenders, the good thing is that they don’t carry the risk. The FHA and thereby the taxpayer carry the risk.

In terms of the taxpayer, the good thing is that home prices have risen in many markets in recent years, and are rising there right now, and that many fallen-behind homeowners can sell their home and pay off the defaulted mortgage with the proceeds from the sale, and maybe have a little cash left over. And if the home goes into foreclosure because the proceeds wouldn’t have been enough to pay off the mortgage, the losses would be relatively small.

The widespread home price declines that occurred during the subprime crisis of Housing Bust have not happened yet. And that’s why at the moment no one is panicking about these sky-high delinquency rates.

But when millions of homeowners cannot make the mortgage payments and have to put these millions of homes on the market – forced sellers – they trigger a sudden surge of supply of homes for sale, and the entire supply-and-demand equation, and thereby the pricing environment, are going to change.

During the last Housing Bust, this phase happened, but it didn’t happen up front. Home prices started falling for other reasons, and then forced sellers and then their lenders tried to sell their homes, which put enormous downward pressure on prices.

This time around, the housing market has split in two:

On one side of the population, there is some sort of land rush going on at the moment, with people trying to buy everything in sight. On the other side are people who’re delinquent on their mortgages.

READ ALSO  Subprime, No Problem? FHA Mortgage Delinquencies Hit Record 17.4%. Even as Fed Policies Trigger Mad Land-Rush in Split Housing Market

But the numbers are skewed: There are on average 460,000 people buying a home every month. But there are now millions of people behind on their mortgages, including 1.4 million whose mortgages are insured by the FHA.

American Enterprise Institute’s Housing Center, which collected the delinquency data from FHA Neighborhood Watch, sees the eventual impact of the FHA delinquencies in this way:

It would be expected that these delinquency percentages will increase over time. At some point, a significant percentage of the then delinquent loans would be expected to be placed on the market by owners under distressed conditions or become foreclosures, and then enter the market.

It is at that point we would expect buyer’s markets to develop in zip codes with heavy exposure to FHA and other high-risk lending combined with high levels of delinquency.

So there is a boom on one side of the housing market, and there is already a bust forming on the other side of the housing market.

FHA mortgages are far from the only delinquent mortgages, and Fannie Mae, Freddie Mac, the VA, Ginnie Mae, and others are also experiencing surging delinquency rates — just not to this extent. So the FHA delinquencies are just a segment of the show.

The table below shows the 167 Metropolitan Statistical Areas (MSA) and their FHA loans, in order of the delinquency rate of those FHA loans (4th column). It also shows the number (not dollars) of active FHA mortgages in that MSA (3rd column) and the share of FHA mortgages in that market as a percent of total mortgages (by number of mortgages, not dollars). In some markets, FHA mortgages have a share of over 20%, and in other markets a share in the low single digits. The problems will be larger where the FHA share is higher.

You can use your browser’s search box to find your MSA. If your smartphone clips the 5th column, hold your device in landscape position.

Metropolitan Statistical Area # active mortgages % delinquent FHA Share by count
1 Nassau County-Suffolk County, NY 57,026 27.8% 15.4%
2 New York-Jersey City-White Plains, NY-NJ 90,521 27.2% 9.7%
3 Newark, NJ-PA 53,191 26.3% 18.2%
4 Fort Lauderdale-Pompano Beach-Sunrise, FL 49,224 25.8% 19.5%
5 Poughkeepsie-Newburgh-Middletown, NY 14,493 25.0% 15.6%
6 Miami-Miami Beach-Kendall, FL 55,397 24.4% 20.0%
7 Bridgeport-Stamford-Norwalk, CT 16,047 24.2% 12.0%
8 New Orleans-Metairie, LA 37,531 22.6% 17.1%
9 West Palm Beach-Boca Raton-Boynton Beach, FL 33,660 22.2% 17.4%
10 McAllen-Edinburg-Mission, TX 19,633 22.0% 35.2%
11 Washington-Arlington-Alexandria, DC-VA-MD-WV 135,757 22.0% 13.7%
12 Chicago-Naperville-Evanston, IL 177,263 21.9% 14.2%
13 Houston-The Woodlands-Sugar Land, TX 212,956 21.6% 19.3%
14 Naples-Marco Island, FL 7,672 21.4% 14.0%
15 Camden, NJ 59,015 21.4% 26.1%
16 San Rafael, CA 258 21.3% 1.6%
17 Lafayette, LA 10,509 21.1% 16.8%
18 Atlanta-Sandy Springs-Alpharetta, GA 251,386 21.0% 21.0%
19 Philadelphia, PA 73,829 20.3% 17.6%
20 Frederick-Gaithersburg-Rockville, MD 28,835 20.1% 12.7%
21 Orlando-Kissimmee-Sanford, FL 83,307 20.0% 21.6%
22 Corpus Christi, TX 13,809 19.9% 23.1%
23 New Haven-Milford, CT 28,439 19.9% 20.7%
24 Boston, MA 22,215 19.7% 8.3%
25 Barnstable Town, MA 3,015 19.7% 7.4%
26 Baton Rouge, LA 28,235 19.6% 19.8%
27 Baltimore-Columbia-Towson, MD 108,235 19.5% 19.4%
28 Gary, IN 32,105 19.5% 22.3%
29 Las Vegas-Henderson-Paradise, NV 71,683 19.4% 16.9%
30 Shreveport-Bossier City, LA 15,243 19.3% 23.2%
31 Port St. Lucie, FL 17,306 19.0% 24.9%
32 Dallas-Plano-Irving, TX 143,996 18.9% 14.8%
33 Cambridge-Newton-Framingham, MA 23,691 18.8% 7.5%
34 Oakland-Berkeley-Livermore, CA 21,198 18.8% 6.1%
35 Lakeland-Winter Haven, FL 31,672 18.6% 34.0%
36 San Antonio-New Braunfels, TX 90,021 18.6% 19.3%
37 Charleston-North Charleston, SC 21,712 18.6% 13.7%
38 Savannah, GA 12,643 18.5% 16.1%
39 Mobile, AL 17,110 18.4% 24.3%
40 Beaumont-Port Arthur, TX 10,177 18.4% 22.9%
41 Wilmington, DE-MD-NJ 30,106 18.4% 23.5%
42 Birmingham-Hoover, AL 39,782 18.3% 18.2%
43 Cape Coral-Fort Myers, FL 26,035 18.3% 21.6%
44 San Jose-Sunnyvale-Santa Clara, CA 4,497 18.3% 2.3%
45 Elgin, IL 25,424 18.2% 19.9%
46 Los Angeles-Long Beach-Glendale, CA 93,217 18.1% 9.7%
47 Fort Worth-Arlington-Grapevine, TX 83,880 18.1% 18.3%
48 Urban Honolulu, HI 4,674 18.1% 4.0%
49 Columbia, SC 30,466 18.0% 18.8%
50 Oxnard-Thousand Oaks-Ventura, CA 7,730 17.9% 8.7%
51 Anaheim-Santa Ana-Irvine, CA 15,270 17.9% 5.3%
52 Lake County-Kenosha County, Il-WI 22,799 17.8% 12.8%
53 Hartford-East Hartford-Middletown, CT 43,274 17.8% 19.5%
54 Worcester, MA-CT 20,657 17.8% 15.1%
55 San Diego-Chula Vista-Carlsbad, CA 25,983 17.8% 7.0%
56 Allentown-Bethlehem-Easton, Pa-NJ 30,198 17.8% 22.2%
57 Vallejo, CA 9,589 17.5% 16.4%
58 Jacksonville, FL 49,106 17.5% 16.1%
59 El Paso, TX 36,085 17.5% 26.9%
60 Albany-Schenectady-Troy, NY 25,063 17.4% 15.0%
61 Springfield, MA 15,883 17.4% 17.4%
62 Memphis, TN-MS-AR 58,994 17.3% 21.6%
63 Charlotte-Concord-Gastonia, NC-SC 76,566 17.3% 13.7%
64 Tampa-St. Petersburg-Clearwater, FL 93,787 17.2% 19.6%
65 Durham-Chapel Hill, NC 11,023 17.2% 8.0%
66 Montgomery County-Bucks County-Chester County, PA 42,650 17.1% 11.7%
67 Riverside-San Bernardino-Ontario, CA 133,256 17.1% 20.6%
68 Greeley, CO 11,611 16.9% 20.7%
69 Reading, PA 15,089 16.9% 23.7%
70 Raleigh-Cary, NC 30,861 16.9% 8.8%
71 Stockton, CA 18,594 16.9% 18.0%
72 Little Rock-North Little Rock-Conway, AR 27,498 16.8% 16.6%
73 Cleveland-Elyria, OH 69,254 16.7% 17.7%
74 Detroit-Dearborn-Livonia, MI 46,751 16.6% 19.1%
75 Greensboro-High Point, NC 23,956 16.5% 15.3%
76 North Port-Sarasota-Bradenton, FL 18,633 16.3% 14.3%
77 Augusta-Richmond County, GA-SC 21,130 16.2% 17.8%
78 Austin-Round Rock-Georgetown, TX 53,496 16.2% 10.6%
79 Santa Rosa-Petaluma, CA 3,344 16.1% 6.6%
80 Sacramento-Roseville-Folsom, CA 43,740 16.1% 13.2%
81 Providence-Warwick, RI-MA 45,916 16.0% 19.0%
82 Virginia Beach-Norfolk-Newport News, VA-NC 62,661 15.9% 14.4%
83 Anchorage, AK 11,628 15.9% 13.9%
84 Denver-Aurora-Lakewood, CO 71,712 15.9% 13.9%
85 Lubbock, TX 11,749 15.8% 19.2%
86 Scranton–Wilkes-Barre, PA 14,564 15.8% 21.5%
87 Greenville-Anderson, SC 25,854 15.7% 17.5%
88 Warren-Troy-Farmington Hills, MI 65,970 15.7% 11.7%
89 Toledo, OH 16,804 15.7% 14.1%
90 Punta Gorda, FL 5,035 15.7% 16.4%
91 Richmond, VA 51,923 15.5% 17.7%
92 Tacoma-Lakewood, WA 24,945 15.5% 16.4%
93 Milwaukee-Waukesha, WI 26,398 15.4% 8.1%
94 Flint, MI 13,536 15.4% 21.3%
95 Winston-Salem, NC 20,002 15.4% 15.3%
96 Deltona-Daytona Beach-Ormond Beach, FL 22,382 15.4% 22.4%
97 Bakersfield, CA 34,054 15.3% 26.5%
98 Syracuse, NY 22,059 15.2% 16.4%
99 Wichita, KS 21,985 15.2% 16.1%
100 St. Louis, MO-IL 98,999 15.1% 15.2%
101 Seattle-Bellevue-Kent, WA 36,066 15.1% 7.5%
102 Columbus, OH 66,178 15.1% 13.6%
103 Daphne-Fairhope-Foley, AL 5,826 15.1% 12.1%
104 Indianapolis-Carmel-Anderson, IN 86,797 15.0% 18.0%
105 Salisbury, MD-DE 9,881 15.0% 10.9%
106 Tulsa, OK 34,777 15.0% 20.4%
107 Oklahoma City, OK 53,384 14.9% 18.6%
108 Nashville-Davidson–Murfreesboro–Franklin, TN 66,809 14.9% 16.7%
109 Chattanooga, TN-GA 18,873 14.9% 18.5%
110 Modesto, CA 15,026 14.8% 21.6%
111 Rochester, NY 34,158 14.8% 14.3%
112 Palm Bay-Melbourne-Titusville, FL 17,715 14.7% 17.7%
113 Myrtle Beach-Conway-North Myrtle Beach, SC-NC 10,748 14.7% 10.1%
114 Tallahassee, FL 10,092 14.7% 15.2%
115 York-Hanover, PA 18,040 14.5% 20.7%
116 San Francisco-San Mateo-Redwood City, CA 924 14.5% 0.8%
117 Wilmington, NC 5,974 14.5% 9.3%
118 Cincinnati, Oh-KY-IN 73,460 14.5% 15.5%
119 Boulder, CO 2,792 14.4% 4.5%
120 Huntsville, AL 15,798 14.4% 12.3%
121 Pittsburgh, PA 68,397 14.4% 14.9%
122 Fort Collins, CO 4,674 14.4% 8.8%
123 Lancaster, PA 13,693 14.4% 13.5%
124 Minneapolis-St. Paul-Bloomington, MN-WI 92,996 14.3% 11.2%
125 Asheville, NC 5,345 14.3% 8.1%
126 Kansas City, MO-KS 70,779 14.3% 15.3%
127 Clarksville, TN-KY 8,551 14.3% 14.5%
128 Youngstown-Warren-Boardman, OH-PA 15,664 14.2% 20.7%
129 Killeen-Temple, TX 11,603 14.2% 12.8%
130 Ocala, FL 9,854 14.1% 21.5%
131 Ogden-Clearfield, UT 22,045 14.0% 15.6%
132 Fort Wayne, IN 16,297 14.0% 15.6%
133 Akron, OH 23,478 13.9% 16.4%
134 Salt Lake City, UT 36,731 13.9% 15.2%
135 Grand Rapids-Kentwood, MI 24,557 13.8% 10.5%
136 Portland-Vancouver-Hillsboro, OR-WA 38,084 13.8% 10.6%
137 Crestview-Fort Walton Beach-Destin, FL 5,191 13.8% 8.0%
138 Pensacola-Ferry Pass-Brent, FL 13,157 13.8% 13.3%
139 Phoenix-Mesa-Chandler, AZ 137,348 13.8% 15.6%
140 Des Moines-West Des Moines, IA 18,475 13.8% 10.8%
141 Buffalo-Cheektowaga, NY 35,660 13.6% 14.0%
142 Colorado Springs, CO 18,309 13.6% 10.7%
143 Louisville/Jefferson County, KY-IN 46,424 13.6% 16.2%
144 Manchester-Nashua, NH 10,156 13.5% 13.8%
145 Fresno, CA 26,768 13.5% 19.7%
146 Knoxville, TN 24,647 13.4% 15.9%
147 Dayton-Kettering, OH 28,632 13.4% 16.2%
148 Madison, WI 4,873 13.4% 3.8%
149 Omaha-Council Bluffs, NE-IA 29,620 13.4% 11.5%
150 Albuquerque, NM 38,673 13.4% 21.1%
151 Tucson, AZ 31,751 13.2% 16.5%
152 Harrisburg-Carlisle, PA 17,682 13.1% 15.4%
153 Canton-Massillon, OH 14,633 13.1% 19.7%
154 Provo-Orem, UT 14,869 13.0% 13.4%
155 Lansing-East Lansing, MI 14,874 12.8% 14.6%
156 Visalia, CA 17,333 12.4% 29.4%
157 Eugene-Springfield, OR 6,693 12.0% 12.3%
158 Bend, OR 3,039 12.0% 9.3%
159 Kalamazoo-Portage, MI 6,716 11.9% 13.5%
160 Lexington-Fayette, KY 13,791 11.6% 13.0%
161 Reno, NV 9,549 11.6% 12.8%
162 Prescott Valley-Prescott, AZ 4,219 11.5% 12.9%
163 Panama City, FL 4,337 11.4% 15.4%
164 Salem, OR 10,050 11.3% 15.7%
165 Spokane-Spokane Valley, WA 14,586 11.2% 11.9%
166 Boise City, ID 21,243 11.0% 11.9%
167 Springfield, MO 13,454 10.5% 14.7%
168 Fayetteville-Springdale-Rogers, AR 16,567 10.0% 13.5%
169 Lake Havasu City-Kingman, AZ 4,295 9.9% 13.5%

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