The NEW Perspective

Loans guaranteed by the Federal Housing Administration, the U.S.-owned mortgage insurer, may be involved in more home-purchase transactions than borrowing financed by Fannie Mae and Freddie.

FHA lending last quarter may have topped the combined volume of government-supported Fannie Mae and Freddie Mac in a home-lending market that's still essentially a government-financed market.

To get some perspective of what's going on consider these figures from Freddie Mac:


2006 - Loans worth $2.858 trillion were originated. The value of VA and FHA loan originations dropped to $80 billion (2.80 percent).

2008 - Loans worth $1.490 trillion were originated - less than half the 2006 total. As to FHA and VA loans, they rose to $291 billion (19.53 percent - almost seven times the 2005 percentage. That number has since grown to almost 50 percent.)


Issuance of so-called non-agency home-loan securities will eventually revive because "the government can't continue to be 95-plus percent of the market," says John Herbert, a director at Credit Suisse Group.

The Good News:
Home prices today are much more in line with personal incomes and mortgage rates are back to all-time lows. As a result, more than half of all Fannie Mae loans for home purchases have been to low-to-moderate income families. Affordability is a good thing and another step towards a real housing recovery.