Earlier this year, Federal Housing Association (FHA) seemed to be in a steep hole when it came to the REO inventory. However, a recent report shows that FHA has sold a record number of REO in June, breaking the record they set in May.

According to U.S. Department of Housing and Urban Development (HUD), the FHA acquired 7,667 REO in June and 13,609 properties. (May’s total sales equaled 12,671 properties.) At the end of Q1 2011, the total FHA REO inventory was 69,959. At the end of Q2, the number is now 54,645, according to an article by Calculated Risk.

Fannie Mae and Freddie Mac are expected to release Q2 results, including REO acquisitions and inventory, later this week. According to Diana Golobay at Housing Wire, Freddie Mac could release their Q210 earnings later this week, but may wait until the close of business on Monday. It is anticipated that Fannie will release it’s report on Thursday.

In addition to an anticipated rough quarter, mortgage investors are experiencing frustration in failed mortgage bond deals. Both Fannie and Freddie ordered to de-list from the New York Stock Exchange (NYSE).

Now, prized mortgages insured by the FHA will become more challenging to get on homes that cost several hundred thousand dollars.

According to an article for TCPalm, the government is set to lower the maximum amount that can be borrowed and still qualify for FHA insurance.

FHA mortgages are prevalent with many buyers because of their appealing interest rates and down payments as low as 3.5 percent. More than 40 percent of home-buying loans were FHA insured last year.

With the lower ceiling, borrowers will have to apply for more conventional loans that are not FHA approved; borrowers could be subject to down payments of 20 percent and possibly higher interest rates.

“Given the economic environment these past few years, many buyers need these more reasonable requirements … FHA will give you financing two years after a bankruptcy, whereas a conventional loan requires a wait of four years,” said Palm City-based Jim Weix, owner of The Real Estate Co. — Treasure Coast Inc, in the article for TCPalm. “FHA is more understanding of those credit dings that people suffer when they lose their job or suffer any of the many employment disasters that are common today.”