The Federal Housing Administration anticipates an influx in insurance claims after mortgage servicers come to terms with the $25 billion settlement reached with the nation’s attorneys general, National Mortgage News reported Sept. 12.
“We are beginning to see a breaking of the foreclosure backlog that has been affecting the entire mortgage industry since the start of fiscal year 2011,” the agency said in a report regarding the FHA mortgage insurance fund, National Mortgage News reported.
According to a quarterly report released by the FHA, the agency paid a record number of foreclosure claims during the third quarter of FY 2012, which ended June 30. Post-settlement claims started to come to the FHA in February.
Additionally, claims on defaulted FHA single-family loans gradually have increased over the past four quarters, National Mortgage News reported. The agency’s insurance fund paid $5.3 billion in claims during the third quarter of FY 2012 — up from $3.8 billion during the same quarter in FY 2011.
The report also showed that the FHA’s total capital reserves have declined by only $100 million to $31.6 billion over the last four quarters. The slight decline partially was attributed to growing revenue from mortgage insurance premiums.
Despite the slight decline in total capital reserves, the agency’s cash flow has taken a negative turn. The mortgage insurance fund had a net operations cash flow of negative $1.7 billion during the third quarter of 2012, compared to a $42 million negative cash flow a year ago, National Mortgage News reported.