Production of Federal Housing Administration loans is running as slow as molasses despite moves from the agency to bolster their appeal.

"They're off because the market's off," said Edwin Hart, group vice president at SunTrust Mortgage Corp.

"It's not just FHA, but VA and conventional too," said Mr. Hart. "It's tough out there."

While 35% of SunTrust's business is in FHA loans, Mr. Hart saw the recent developments as simply new tools" for more affordable lending.

FHA only recently cut its mortgage insurance premium by 75 basis points to 2.25% of the mortgage from 3%.

The move was seen as an effort by the agency to recapture part of the market it lost in the 1980s.

In March, FHA officials estimated that 20,000 to 30,000 potential borrowers would take advantage of the early reduction.

But most lenders have come up empty.

Not All Bad

"We haven't seen any corresponding rise in production because of them," said Mickey Ross, executive vice president of Barnett Mortgage Corp., Jacksonville, Fla.

Volume has been steady in Florida, according to Mr. Ross, whose bank did more than $100 million in FHA loans, most of which were for purchase.

But not everyone is singing the blues.

Pulaski Bank, St. Louis, has seen a rise in FHA production even though conventional volume took a big hit.

"We've had more interest in FHA since the changes in the premium," said William A. Donius, marketing director for Pulaski.

The thrifts' FHA and VA loan production in April accounted for about 13% of its total volume, up from March but down from February's high of 23%.

"Despite the fact that our [conventional application] volume has declined in April and May, our FHA application volume is actually up 8%," said Mr. Donius.

The FHA is considering lending as much as 100% of the value of a new home and raising the level of insurance to cover homes up to $173,000.

Mr. Ross of Barnett isn't holding his breath for the agency's initiatives to produce much more volume.

"They've been talking about 100% loans, but we haven't seen anything come of it," he said.

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