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Volume 9 - Number 10

April 22, 2016

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VA Paced Growth in Government- Insured Servicing During 1Q16

The Ginnie Mae servicing market continued to grow during the first three months of 2016, with most of the impetus coming from the VA home loan guaranty program. A new Inside FHA/VA Lending analysis of mortgage-backed securities data reveals that the amount of Ginnie servicing outstanding swelled to $1.544 trillion as of the end of March, a 1.65 percent gain from the previous quarter. Because issuer-servicers regularly repurchase seriously delinquent loans out of Ginnie MBS pools, the actual volume of government-insured loans outstanding was somewhat higher. The VA program saw the most growth, increasing by 3.25 percent in just three months, while FHA servicing in Ginnie MBS rose only 0.96 percent from December 2015. Servicing of rural housing loans guaranteed by the U.S. Department of Agriculture was up 1.34 percent, while the FHA insurance program for Native Americans ... {4 charts]

Annual MIP Cut Helped Spur FHA Streamline Refi Activity in 2015

FHA’s Streamline Refinance program went through an erratic pace in 2015 as business exploded in the second quarter and declined over the second half of the year. FHA lenders closed 2015 with $67.5 billion in total streamline refis, a 252.4 percent improvement over volume in 2014. Production fell 30.0 percent in the fourth quarter from the prior quarter. The second-quarter spike – which caused streamline refi volume to jump from $12.1 billion in the first quarter to $25.0 billion in the second quarter – was fueled apparently by FHA’s reduction of the annual mortgage insurance premium. In January 2015, the FHA cut its MIPs on 30-year loans, making it less expensive to carry an FHA home. Under the revised MIP schedule, a 30-year FHA streamline refi with a loan-to-value ratio over 95 percent is charged an annual MIP of 0.85 percent. For a 30-year loan under 95 percent LTV, the annual MIP is ... [ 1 chart ]

GNMA Eliminates Targeted Lending Initiative Due to Very Low Volume

Ginnie Mae is pulling the plug on its long-running Targeted Lending Initiative because it is no longer having an impact on overall lending in underserved urban and rural areas. TLI volume has seen more decline than uptick in recent years despite its offer of a Ginnie Mae guaranty fee reduction to encourage lenders to make more loans in underserved communities, according to an agency spokesperson. Reducing the Ginnie Mae guaranty fee lowers lenders’ expenses and, ideally, provides an incentive to increase lending. In 2005, Ginnie Mae extended the TLI to areas hardest hit by Hurricane Katrina, reducing the guaranty fee by as much as 50 percent to spur issuers to originate or purchase mortgage loans in areas where the hurricane inflicted the most damage. At one point, the program had more than 10,000 census tracts that were identified as targeted areas. Other TLI areas included those ...

FCA is Altering the FHA Landscape As Banks Flee, Nonbanks Jump In

More large lenders may pull back from FHA lending in the wake of this month’s massive settlements between two major FHA lenders and the Department of Justice to resolve alleged violations of FHA lending guidelines and the Federal Claims Act, warned a Baker Donelson attorney in a recent analysis. As DOJ increases its use of the FCA, “large lenders will continue to step away from FHA originations,” said Craig Nazarro, of counsel at Baker Donelson in Atlanta and author of the analysis. Nazarro also warned nonbank FHA originators of the risk they are taking on by continuing to originate FHA loans and growing their government-backed loan portfolio as the larger banks exit or limit their participation in the FHA market. “Many large lenders have faced or are currently facing these [enforcement] actions, and from the [DOJ’s] recent statements, it does not appear that they are slowing down ...

VA Guidance Clarifies Compliance With TRID Disclosure Requirements

The Department of Veterans Affairs has issued new guidance clarifying how VA lenders should comply with the disclosure requirements of the new TRID rule. TRID, which stands for Truth in Lending Act-Real Estate Settlement Procedures Act Integrated Disclosures, was adopted in final form by the Consumer Financial Protection Bureau on Oct. 3, 2015. Specifically, TRID establishes new requirements regarding mortgage disclosure forms, which lenders must use for all home loans. Lenders are required to itemize the services and fees they charge to borrowers on the TRID disclosure forms, instead of on the HUD-1 closing statement, in connection with a loan application to purchase or refinance an existing mortgage. However, switching from the HUD-1 to the TRID form has caused uncertainty among VA lenders as to how to complete the new forms. VA’s TRID guidance lays out ...

FHA Eases Rules for Qualifying Borrowers with Student Loans

The Department of Housing and Urban Development has revised guidance to lenders for calculating monthly student-loan payments for debt-to-income ratio purposes. The change is aimed at helping more borrowers with student-loan obligations to qualify for an FHA-insured mortgage. Currently, the FHA requires lenders to calculate a monthly payment for deferred student loans based on 2.0 percent of the outstanding balance, and include it in the borrower’s DTI for qualifying purposes. The disadvantage of the current method of calculation is that it makes it harder for the borrower to qualify for an FHA loan, according to Marc Savitt, president of The Mortgage Center, an exclusively FHA/VA lender in Martinsburg, WV. Under the revised guidance, regardless of the borrower’s payment status, the lender must use: (a) the greater of 1.0 percent (a 50 percent reduction from the current 2.0 percent) of the ...

HUD Sets Up Joint FHA/VA System To Prescreen Mortgage Applicants

The Department of Housing and Urban Development has issued a notice to establish a computer-matching program between FHA and the VA that would enable the two agencies to prescreen mortgage applicants. The notice was published in the April 15 Federal Register. The computer-matching program would allow HUD to incorporate VA debtor files into the department’s Credit Alert Verification Reporting System (CAVRS). Consequently, both the FHA and VA would be able to prescreen loan applicants and identify who is delinquent or in default on a federally guaranteed mortgage loan. The use of CAVRS would allow HUD to monitor its FHA programs better and prevent the extension of credit to individuals who are delinquent or in default on their obligations to HUD and other federal agencies. Meanwhile, VA expects to achieve savings through risk reduction and ...

Around the Industry

FY 2017 Appropriation for USDA Single-Family Guaranteed Mortgage Program Unchanged. The House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies recently approved FY 2017 funding for several housing programs. The Section 502 single-family guaranteed home loan program was appropriated $24 billion for the third straight fiscal year. On the other hand, the direct single-family loan program is funded at $1 billion, up $100 million from both the FY16 and the President’s budget for FY17. In addition, Section 515 rural rental housing received an increase in funding to $35 million. HECM Production Up in February. Home Equity Conversion Mortgage endorsements rose 20.3 percent in February due to a ...

Poll

Does your lending shop have any plans to make non-jumbo, non-QM loans this year? These would be loans similar to "Alt A" and subprime products made BEFORE standards were loosened severely in the 2004 to 2007 era.

Yes.

33%

No.

33%

It’s under consideration, maybe by 3Q or 4Q.

26%

We were going to until the TRID "error" mess hit.

7%

Housing Pulse