As of June 30, 2014, U.S. Housing Finance Agency (HFA) single-family loan delinquencies had fallen to their lowest level since the third quarter of 2009, signaling a downward trend that that may indicate HFA delinquencies will stay in a lower range. State delinquency rates continue to be lower than those for HFAs, but the gap continued to narrow in the second quarter of 2014. This was the second consecutive quarter in which HFA loan delinquency rates improved, and the difference between state loans and HFA loans was its smallest since the third quarter of 2012. The gap difference between HFA and state loans is an important consideration in that it addresses the influence of the state real estate market on HFA loans. By comparing HFA loans to state loans, one can better explain the performance of HFA loans. HFA loan delinquencies declined to 6.29% of the total outstanding loan balance (compared with 6.64% in the first quarter), and state prime loan delinquencies rose slightly, to 4.64% from 4.58% in the second quarter. A recovering housing market is probably the largest reason for the improved performance, but then again, the state rate nudged up a bit during the same time.
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