Increase in Mortgage Delinquencies for 4Q 2016

[Kevin Phu]

"Federal Housing Administration mortgage delinquencies jumped in the fourth quarter for the first time since 2006, the Mortgage Bankers Association reported Wednesday. The FHA insures low down-payment loans and is a favorite among first-time homebuyers.

The seasonally adjusted FHA delinquency rate increased to 9.02 percent in the fourth quarter from 8.3 percent in the third quarter, MBA data show. The jump, which followed the lowest delinquency rate since 1997, was driven by loans made since 2014 and early-stage delinquencies, those just 30 days past due."

http://www.cnbc.com/2017/02/15/mortgage-delinquencies-among-some-homeowners-just-spiked-spelling-trouble.html

Thoughts? As a newbie, I'd like to see how the experienced investors use news like this in their investing. I see two things here and maybe I am wrong. It could be a bad sign and the cautious investor will take this time to sit on the sidelines while saving up capital for a drop in the RE market. What I also see is that an investor who invests in REO/Foreclosures see this as a prime opportunity to buy up homes from delinquent homeowners to save them from foreclosure.

[Kevin Phu]

Further reading of the article raises another red flag to me. It talks about POTUS freezing the pending FHA PMI rate cuts and how that will negatively affect low income home buyers. It goes on to state that the outgoing Secratary of HUD said that this rate decrease would save the average low income borrower about $500/year.

$500 in savings per year would equate to $41/month. If those estimates are accurate, shouldn't that raise some very high concerns? If a home buyer's finances are so tight that an average of $41 of savings per month would significantly help them, they probably were never in the position to purchase a home in the first place. Reminds me of what led up to the 2008 crash.