This is a contribution from Reverse Engineering Finance.
The second half of the year typically sees significant jumps in FHA mortgage delinquencies/serious delinquencies. This starts with the June data and indeed, there is such a jump this June.
GNMA June MBS data dropped last night and is hot off the presses — let’s take a look.
The Numbers
MoM headline delinquency rates for FHAs in the GNMA II portfolio (about 6.9/8 million total FHAs) jumped up in June (from 9.96% to 10.67%) Serious delinquency rates moved up as well (3.21% to 3.32%). The move higher in serious delinquency rates lags the move in delinquency rates as the impulse of folks newly not paying their mortgage in June takes a few months for some of them to transition to serious delinquency.
This effect is shown in the figure above. Note the 35k jump in borrowers 1 month late with an additional 10k jump in borrowers 2 months late. A chunk of that rise will likely continue to travel more delinquent in the upcoming months and raise the 3+ month columns accordingly (also note 6 means 6+). The reverse effect is also evident in the December to January data where the DLQ rate fell significantly but the SDLQ rate continued to rise a bit.
YoY, headline DLQ is up 8% vs. last June (9.86% → 10.67%) and SDLQ is up 27% (2.61% → 3.32%). The full details including a breakdown of the headline number into various portfolio cohorts is charted below and the raw numbers behind the charts (also the raw numbers behind the figure above) are included in a spreadsheet at the bottom.
Partial Claims
Partial claims continue to be performed in earnest. 24746 partial claims were performed in June covering 153119 mortgage payments (~237m dollars).
You may note this is down another ~5k from May and down ~10k from April. Is this a trend of servicers not doing partial claims prior to the FHA loss mitigation procedures tightening in October?
I tend to not think so, but am unsure. There is not a lengthy history on partial claims, but late spring/June has been the low point for them the past 2 years (June 2025 is still 4k partial claims above last Junes number), so the decline this June could be “seasonal” and would make sense given the seasonal improvement in SDLQ rates that occurs in the first half of the year. Next month should give a better indication how the last few months before October look.
11812 out of the 24746 (48%) were repeat recipients with 5125 (20.7%) on their 3rd of more partial claim. 7715 (31%) received at least one other partial claim since February of 2024.
June FHA Full Portfolio Charts
Note the across the board rise and the elevated levels this year versus last.
June FHA Recent Originations Charts
Note the rise across the board. Further note though that while the recently originated modifications sport delinquency rates at or near all time highs (even after the slight pullback earlier this year), the rest of the portfolio is not much different than where it was last year. Bottom line, mods aside, the recent originations (3-15 months ago) performance really isn’t the story.
June FHA Claim vs. No Partial Claim charts
In case you missed it from previous posts, whether a loan has had a partial claim or not in its history makes it 5-7 times more likely to be DLQ or SDLQ. That relationship continues to hold.
Subscribe to the Reverse Engineering Finance
