Connecticut FHA short sales skyrocketing?

Yesterday I met with a Connecticut couple considering a short sale. Like most other short sales I have been involved with lately, this loan is an FHA loan. Now, I have not done an official study on the actual rates of FHA default, but as a CT short sale agent, it is very apparent to me that the FHA is becoming inundated with delinquent loans, short sales and likely foreclosures as well.

A year or two ago I would rarely have an FHA short sale in the mix…but nowadays more than half of the new short sales I take on involve an FHA mortgage.

Furthermore, it seems FHA short sales are taking longer to get approved, and just recently it seems the FHA has taken a stance of “deny as many as possible” as I’ve also experienced a lot of resistance with what used to be some of the most painless short sale approvals. I believe this is all because FHA swamped with new short sale requests and lacks the man power to handle the volume effectively.

So whats coming down the line from FHA? How long can this entity stand as it is with what seems to be an evergrowing default rate?

While the statistics say the Connecticut  rate of “seriously delinquent” FHA loans is just under 2% (as is the nationwide average), I do suspect that number will continue to grow quite quickly through the next several  years as more and more borrowers see no hope of a quick recovery and look to cut their losses.

Need help with an FHA short sale?