Delinquencies Soaring For Federally Backed Home Loans in Texas
Dallas-Fort Worth, Houston and San Antonio are among the U.S. cities that are seeing the biggest increases in late payments on federally backed home loans. More than 17% of the Federal Housing Administration’s almost 8 million home loans nationwide were delinquent in August, according to a new study from the American Enterprise Institute.
“Rising FHA delinquency rates threaten homeowners and neighborhoods in numerous other metro areas across the country,” institute researchers said in the report. "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.”
In August, Houston had the second-largest share of FHA loans that were late — more than 22%. In the Dallas-Fort Worth area, more than 19% of homeowners with FHA loans were behind in their payments. And in San Antonio, 19% of FHA loans were also late in August. The increase in late FHA loan payments is even greater than the rise in the number of overall mortgage delinquencies since the start of the pandemic.
More than 8% of D-FW homeowners with a mortgage had missed at least one loan payment in the latest survey. A year earlier, only 3.5% of area homeowners were behind on mortgage payments, according to a new report by CoreLogic. Many of the FHA borrowers have taken loan payment forbearance since the start of the pandemic.
A new study by the Federal Reserve Bank of Dallas warns that highly indebted FHA borrowers are at risk of losing their homes when forbearance programs end.
“Our analysis of FHA mortgages illustrates a very high default propensity that relates to the state of the economy; it also shows that households with a greater ability to pay, on average, perform better,” the Federal Reserve report warns. “There is a risk of a large increase in FHA mortgage defaults, especially among those borrowers with high debt-to-income ratios...”
