In 2011 HUD expects to keep up with, or even exceed, the financing volume that was achieved in FY 2010 with 318 Section 223(f) loans totaling $2.5 billion closed in FY 2011.
The Section 223(f) program is known for its low interest rates since the FHA-insured mortgages are insured by Ginnie Mae (GNMA) and are sold as mortgage-backed securities. The capital markets can sell the securities at the most favorable interest rates with the high rating of GNMA backing the loans. FHA 223 F loan rates have been in the high 3% to the low 4% range for most of the year.
Even with other lenders that can process the loan quicker now back in the market the lower rates are drawing some large borrowers that typical looked at agency and life insurance loans that now are will to wait to lock into the lower FHA 223(f) interest rate for 35 years instead of five or ten years.
FHA continues implementing initiatives to improve efficiency in an effort to improve processing times but the high volume has had the opposite effect keeping processing times relatively stagnant.
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