[Update: HUD refutes LPS numbers, claims 19,000 FHA foreclosures in April]

Foreclosure starts on mortgages insured by the Federal Housing Administration spiked 73% in April, according to data from Lender Processing Services (LPS).

Mortgage servicers foreclosed on 63,129 total FHA-backed loans in April, more than any other product type including home loans guaranteed by Fannie Mae, Freddie Mac or held by private investors.

An FHA spokesman refuted the LPS numbers in a statement sent late Thursday. According to the latest Department of Housing and Urban Development data, servicers started less than 19,000 foreclosures on FHA-backed loans in April, the spokesman said. He added that LPS data did not cover the entire FHA universe, and its extrapolation method resulted in an overestimate.

LPS did not immediately respond to request for comment on the HUD claims.

When the mortgage market collapsed in 2007, FHA stepped in. Originations backed by the agency tripled in 2008 and increased to five times the historical average the next year. The rise in April foreclosure starts consisted of loans guaranteed in 2008 and 2009, LPS claims.

"Whether or not it's the beginning of a trend for these vintages is hard to tell. It's cloudy," said LPS Analytics Senior Vice President Herb Blecher. "It does seem like there is some exogenous effect in April."

In 2010, potential foreclosure abuses surfaced at the largest servicing operations, and investigations were launched looking into the largest servicing shops. In many states, the foreclosure process was frozen to correct the problems.

Since federal regulators entered into consent orders with the nation's 14 largest servicers and state attorneys general settled with the largest five for $25 billion, a foreclosure restart has been anticipated.

But in April, it seems as though such a reboot occurred only with FHA loans. A spokesman for the FHA did not provide comment.

Across the entire universe of mortgages tracked by LPS, foreclosure starts actually declined by 2.6%.

Not seeing the spike

J. David Motley is the president of Colonial Savings based in Fort Worth, Texas. Colonial services roughly 18,000 FHA loans, roughly 15% of the company's entire portfolio. It has held the same foreclosure rate on these loans — roughly 1% — every month for the past year.

"We haven't seen a spike," Motley said.

Instead, the sudden increase could be a result of the largest servicers bringing forth their backlog of foreclosures that were being held back due to questions about foreclosure practices, Motley speculated.

The FHA has an enormous backlog due to its historic amount of business in the wake of the financial crisis.

The FHA had 707,863 loans in serious delinquency as of March, down 2.2% from the previous month but up nearly 22% from one year ago, according to its latest outlook report. The 9.4% delinquency rate has remained around the same level for the first part of 2012.

Such a backlog has put a drain on its emergency mortgage insurance fund, which could have become insolvent this year were it not for several settlements, including a $1 billion deal with Bank of America (BAC) over past origination problems. The FHA also raised premiums in April to boost the fund.

Carole Galante, the new FHA commissioner, told a House subcommittee in February that the agency would not need a bailout, and that its volume of new loans has been on the decline since 2009.

"FHA's loan volume has declined 34% from its peak in 2009, and its market share is decreasing for the first time since 2006, thereby laying the ground work for private capital to return to the market," Galante said.

And newer loans are meeting tighter underwriting standards. For the first time in history, the average FICO score on an FHA-insured loan was above 700 in 2011, according to the book of business report.

Blecher was hesitant to forecast servicer behavior, which has been anything but predictable since the foreclosure crisis struck in 2007.

"If history is any guide, it's hard to predict," Blecher said.