If You're Behind on an FHA Loan, You Are the Part of the Data That Got Worse

If you’re a payment or two behind on an FHA mortgage, the good news version of this week’s data isn’t about you. Fewer people are slipping into late. More of the people who already slipped are staying there, and almost all of that increase is sitting on FHA loans.

The Mortgage Bankers Association released its quarterly delinquency survey on August 13. The headline reads fine. Total delinquency on one- to four-unit homes fell to 4.37% of loans outstanding, down 7 basis points from the first quarter.

Read one line down. The 30-day bucket fell 3 basis points. The 60-day bucket fell 5. The 90-day bucket went up. Foreclosure inventory went up too, to 0.67% of loans, nearly 20 basis points higher than a year ago.

The early trouble is clearing. The late trouble isn’t.

Marina Walsh, the MBA’s vice president of industry analysis, said it without decoration: “Some loans are continuing to move to later stages of delinquency.” She added that FHA serious delinquencies are “becoming pronounced, increasing more than 225 basis points from the previous year.”

Serious delinquency means 90 days past due or already in foreclosure. Over the past year that rate rose 2.27 percentage points on FHA loans. On conventional loans it rose 0.06 points. On VA loans, 0.31. One group is carrying this.

The New York Fed’s household debt report, out two days earlier, points the same way from different data. Its measure of mortgage balances newly going 90 days late ran 1.29% a year ago and 1.52% now. Every other category on that table was flat, barely moved, or improved. Mortgages were the outlier, in a release headlined “Credit Card Delinquency Transition Rates Remained Steady.”

Nobody is lying. The averages did improve. Averages are also where a concentrated problem hides.

If you bought with a small down payment in the last few years, you have thin equity, an escrow bill for taxes and insurance that keeps climbing, and no cushion if a paycheck stops. Walsh named the pressure: a softer labor market and rising delinquency on student loans, cards, and car loans.

This isn’t a housing crash. A specific group of borrowers is running out of room.

Your servicer generally cannot start the legal foreclosure process until you’re at least 120 days behind. That’s the federal rule, and it’s your clock. Four missed payments and the window shuts.

Call the servicer this week and ask for a loss mitigation application in writing. Use those words. FHA runs a defined order of options, and a trial payment plan is usually the first one, with rules that changed this summer.

Then call someone who doesn’t work for the servicer. The CFPB runs a search tool for HUD-approved housing counselors, and that counseling is free or close to it. Use it before you accept the first offer a servicer reads off a script.

If you’re current and just want to see how much room you have, run your real payment, taxes, and insurance through our mortgage calculator. More on servicers and refinancing in our mortgages hub and our best mortgage offers page.

The two reports count differently, which is why the numbers don’t match. The MBA measures the share of loans delinquent at a point in time, seasonally adjusted. The New York Fed measures flow, the share of current balances that newly went 90 days late during the quarter. Different math, same direction.

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