Refinancings are making up a higher proportion of Federal Housing Administration early defaults, as the performance of FHA purchase mortgages improves, according to Potomac Partners, a consulting firm.

"Refinancings are 44% of FHA originations and 70% of its early defaults and claims," Brian Chappelle, a partner in the firm, said in an interview Monday.

Ordinarily, refinancings have performed much better than purchase mortgages.

But this changed in the fourth quarter of 2008, according to data on the FHA's Neighborhood Watch Web site, when the rate of defaults and claims (two years after origination) on refinancings hit 4.38%. At yearend 2009, the rate was 5.9%, compared with 5.05% for all FHA single-family loans.

The good news is that purchase mortgages are performing well and FHA had a 24-basis-point decline in the overall default and claim rate, to 4.81%, in February.

"To have early defaults decreasing is really encouraging," Chappelle said.

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