Oregon Housing Council SF Presentation: Uninsured and Private Mortgage Insurance Losses Per Loan to OHCS Were 10X Higher than for FHA Loans.

At Housing Council meeting today, there was one of best and most detailed single family presentations I have ever seen at a Council meeting. Kudos to Bob Larson for a very informative presentation.

I will encourage OHCS to share or post the presentation on their website, but in interim I fixated on the data in one table. It showed by insurer, the number of OHCS SF [foreclosure] acquisitions, the net loss, and the average loss per property for CY 2011 through September 30th. 

I expanded upon that to show in table format how much different the losses would have been in the average loss per loan to OHCS for all insurers had matched the average loss to OHCS from FHA loans ($6,274 per loan). The table is pasted below and my observations are below the table.  

Observations:

1. IF all loans had been FHA insured total losses to OHCS would have been reduced by 69%, or $1.7 million.
2. Uninsured loans were a relatively small number, but the average OHCS loss per loan was $65,255, more than 10 times the average loss to OHCS from an FHA loan. (Note that uninsured loans started with a LTV of 80% or less; a loss of $65,255 per loan suggests that the value of the uninsured home must have dropped by 20% PLUS the portion of the average loss per loan that did not include closing costs (about $53,000) . Big Wow!
3. Average OHCS losses per loan for acquisitions with private mortgage insurance was even larger at $70,840 per loan. Even Bigger Wow!
4. Keep in mind that the loss to OHCS is NOT the loss per loan; the lower rate of loss per loan to OHCS for FHA and RD loans is because those programs cover a greater share of the loss than did private mortgage insurance or when the loan was uninsured. Losses in those cases transfer to FHA and RD.
5. While OHCS losses from single family acquisitions were $2.4 million through September, SF bond revenue was more than enough to pay those costs, and the indication was that the actual losses may have been less than conservative estimates used by OHCS in their  financial assumptions.

Originally created and posted on the Oregon Housing Blog.