HUD Projection: Denver Will Place Fourth Nationwide for FHA Loan Volume

DENVER-Lenders are expected to make 141,768 FHA-insured loans in the Denver metropolitan area with a total value of nearly $15.4 billion, according to a projection by the US Housing and Urban Development Department.

IF HUD’s projections for Denver and 49 other cities are correct, Denver will rank fourth in the country for loan volume and seventh nationwide for the number of loans. Chicago tops the list with a projected 241,495 FHA-insured loans.

So far this year, lenders have made 17,904 loans for about $2.4 billion in the Denver area. In the first 10 months of the year, 40,690 homes have been sold in this area for a record $8.7 billion.

During the oil and real estate crashes of the 1980s, FHA and VA loans accounted for more than half of the mortgage lending in the metro area. Peter Lansing, president of Denver-based Universal Lending, says HUD may achieve its ambitious goals over the next five years because the FHA’s Homebuyers Savings Plan will reduce FHA’s up-front insurance premium by one third to 1.5% of the loan amount. The plan also will eliminate FHA’s annual premium of 0.50% (50 basis points) on all loans once homeowners build 22% equity in properties.

Lansing told GlobeSt.com the changes will make FHA-insurance loans considerably more competitive with conventional loans, which have dominated the local lending scene in recent years. The FHA-insured loans primarily will help first-time homebuyers who benefit from FHA’s lower down payments and more lenient underwriting, he says.