FHA Delinquencies Surge Amid New Loss Mitigation Framework

Ginnie Mae's March 2026 Global Markets Analysis Report, issued on April 17, 2026, focuses on the significant rise in FHA pipeline delinquencies and possible contributing factors. Relevant excerpts below copied and pasted directly from the Report:

Overview of Numbers:

“From Q3 2025 to Q4 2025, FHA’s serious delinquencies increased 104 bps to 5.14% and VA’s delinquency rates saw a 28 bp increase to 2.58%. Serious delinquency rates for Fannie Mae and Freddie Mac saw increases of 4 bps and 2 bps from Q3 2025 to Q4 2025, respectively.

States Seeing the Highest Delinquencies:

As of February 2026, Illinois had the highest serious delinquency rate for FHA loans while California, Virginia, and North Carolina had the lowest of the top 10. Georgia had the highest serious delinquency rate for VA loans while Virginia had the lowest of the top 10.

Key Driver of FHA Delinquencies:

Recent change to the FHA’s loss mitigation framework, and the specific impact of new Trial Payment Plans (TPP) on a significant universe of delinquent borrowers.

The new permanent loss mitigation framework seeks to promote long-term sustainability by, among other measures, requiring delinquent borrowers to complete a TPP successfully before executing a permanent loan modification. While a TPP is in effect, the delinquent loan may not be bought out of its existing pool, which may lead to short-term increases in delinquency ratios for pools with higher concentrations of stressed borrowers.

From October 2025, when the new permanent FHA waterfall went into effect, through February 2026, the Ginnie Mae single family loan portfolio reported an average monthly delinquency ratio of approximately 9.2%. This represents an increase of approximately 90 basis points compared to the preceding 12 months beginning in October 2024, which reported an average monthly delinquency ratio of approximately 8.3%.

This increase appears to be driven by the length of delinquency rather than by an uptick in the number of loans becoming newly delinquent. A more granular analysis of the reported delinquency metrics indicates that the ratio of loans that are newly delinquent (DQ30) has hovered at a monthly average of approximately 5.2%. Similarly, the ratio of loans that are more than 60 days but less 90 days delinquent (DQ60) has also remained relatively consistent at approximately 1.8%.

While the ratio of pooled FHA loans that are seriously delinquent (DQ90+) has increased by 128 basis points since FHA’s permanent loss mitigation waterfall went into effect, this increase appears to be driven by the length of time that loans remain seriously delinquent status rather than by an uptick in the rate of loans rolling into serious delinquency. Analysis of roll rates into various delinquency statuses shows that transitions from 60-day delinquency into 90+ day delinquency remained broadly stable and in line with historical norms.

Conclusion per the Report:

GNMA is closely monitoring the extended in pool delinquency rates resulting from FHA’s revised loss mitigation framework. They recognize that as a result of these changes, the performance of certain issuers’ portfolios has been negatively impacted in the short run. They believe that these increases in serious delinquencies must be closely monitored, but the expectation is that many of these delinquent borrowers will be successfully modified through some form of Federal program.”

“As a result of the implementation of the TPP requirements, FHA loans in seriously delinquent status have remained pooled for longer than under the previous framework, where roughly 80% of DQ90+ loans remain seriously delinquent in the current reporting month to the next. Following the implementation of the new rule, the percentage of loans remaining DQ90+ month to month has increased to approximately 90%. Notably, some of the loans that appear as 90+ days delinquent under Ginnie Mae’s monthly disclosure rules, are currently performing according to the terms of a TPP. The long-run serious delinquency level for pooled FHA loans may ultimately remain at higher levels than experienced under the previous loss mitigation structure. However, the new framework may improve borrower outcomes by requiring borrowers to demonstrate sustained payment performance prior to modification, which in turn, may positively impact the long-term performance of re-pooled modified loans.”