FHA loans change as big banks exit the category.

While the biggest banks are moving away from FHA loans, smaller non-banks have stepped up, changing the game. RealtyTrac economist Peter Miller takes a look at the effect of big banks' FHA defections.

Big banks have been opting out primarily because of buy-back risks on FHA loans; small lenders, mostly non-banks, have done more than enough to keep the FHA busy:

In fiscal 2015 the FHA reported huge gains. Endorsements rose by 329,877 loans, a massive increase. Reserves grew by $19 billion and are now above the congressionally-mandated 2 percent capital ratio. What was the engine behind such growth? A reduction of the annual mortgage interest premium in January 2015 by .5 percent coupled with the ability to buy with just 3.5 percent down. 

For more information on big lenders defecting from the FHA, head over to RealtyTrac:

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