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Volume 8 - Number 6

March 20, 2015

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VA Originations Increase in 4Q14, 2014 a Record Year for Purchases

Production of mortgages with a VA guaranty grew a hefty 17.9 percent in the fourth quarter, providing an emphatic ending to a record year of VA purchase-loan originations, according to Inside FHA/VA Lending’s analysis of agency data. Total VA volume for the entire year was $112.0 billion in purchase and refinance loans. VA streamlined refinancings accounted for 22.4 percent of overall VA originations for 2014. Production for the full year, however, was down 13.8 percent compared to the same period in 2013. Lenders attributed the increased VA market share to the younger generation of soldiers and sailors engaged in foreign wars as well as veterans returning from the war front. Last year, 18 percent of VA loans were made to active-duty service members and 82 percent were loans to veterans, said Mike Frueh, director of the VA Home Loan guaranty program. “There is a lot more ... [1 chart]

Large Coastal States Account for Bulk of FHA/VA Securitizations

Security issuances backed by FHA and VA loans totaled $267.6 billion in 2014, with several large states accounting for a significant share of FHA/VA originations. An estimated $158.1 billion of FHA-insured loans, including modified loans, were securitized last year, with purchase home loans comprising most of the transactions. Approximately $30.0 billion of FHA refinance loans were securitized as well. The FHA MBS had an average loan-to-value ratio of 92.3 percent and a debt-to-income ratio of 40.1 percent. The average FICO score was 672.3, which was indicative of first-time homebuyers and borrowers with slightly tainted credit. First-ranked California, Texas (#2) and Florida (#3) combined for a total of $48.0 billion, which represented 30.3 percent of FHA loans in Ginnie Mae mortgage-backed securities in 2014. Fourth-ranked New York reported a total of $6.7 billion while ... [ 2 charts]

HUD Reports Significant Progress In Distressed Loan Resolutions

Half of the loans in the Distressed Asset Stabilization Program have been resolved and a significant percentage of homeowners have avoided foreclosure, according to the latest DASP progress report from the Department of Housing and Urban Development. A review of the FHA single-family loan sale (SFLS) program found that, of the 48.6 percent that have been resolved, 43.5 percent have avoided foreclosure. The anticipated alternative for these borrowers – property conveyance, where their property becomes real estate-owned – would have led to foreclosure, the report said. Specifically, short sales and deeds-in-lieu of foreclosure were the disposition methods employed in foreclosure avoidance. In addition, 16.3 percent of resolved loans were re-performing as of Feb. 6, 2015. This reflects a 49.5 percent change in the re-performing rate reported in the ...

RHS Seeks Comments on Proposed QM Rule, Simplified Refinancing

The U.S. Department of Agriculture-Rural Housing Service has proposed to revise regulations for the single-family housing guaranteed loan program pertaining to qualified-mortgage (QM) requirements, refinancing, principal reduction and lender indemnification. The deadline for comments is May 4, 2015.The RHS is proposing to amend its regulations to indicate that a loan with an RHS guarantee is a qualified mortgage if it meets certain requirements set by the Consumer Financial Protection Bureau. The CFPB published a QM rule, which became effective on Jan. 10, 2014. Among other things, the rule requires creditors to make a reasonable, good faith determination of a borrower’s ability to repay the mortgage loan. In addition, the rule establishes a safe harbor from liability for transactions that meet the QM requirements or, in certain cases, a rebuttable presumption of ...

Advocates Say New HECM Rule is A Disaster for Surviving Spouses

Consumer advocates and attorneys are urging the Department of Housing and Urban Development to delay the implementation of a new policy that purports to provide relief to surviving spouses of reverse-mortgage borrowers and to find solutions that are more effective. The group said the policy HUD announced in Mortgagee Letter 2015-03 on Jan. 29 is so restrictive that virtually all surviving non-borrowing spouses will get no relief. A letter to the agency, drafted by the National Consumer Law Center and signed by the Consumers Union, California Reinvestment Coalition, National Housing Law Project, Housing and Economic Rights Advocates and Institute on Aging denounced the new policy. They said most surviving spouses of deceased borrowers of Home Equity Conversion Mortgage loans will not be able to meet the policy’s stringent guidelines and will ...

FHA Servicing Transfer Could Be in Spending Bill, Not in Reform Bill

The FHA’s request for authority to require specialized subservicing in certain circumstances could be included in an appropriations bill rather than in housing-related legislation, according to Sen. Jack Reed, D-RI, ranking minority member of the Senate Appropriations Subcommittee on Transportation, HUD and other Related Agencies. Reed raised the possibility during a recent hearing on the Department of Housing and Urban Development’s FY 2016 budget proposal. Among other things, the FHA has been seeking authority from Congress to require, in individual cases, inexperienced lender/servicers to transfer the function to a specialized servicer to better assist borrowers and reduce losses to the Mutual Mortgage Insurance Fund. Allowing the FHA to require transfer of servicing will help more distressed homeowners stay in their homes and avoid foreclosure, said ...

Issuers Slow to Sign Up for IOPP; Ginnie Warns on Custodial Funds

Issuer registration for Ginnie Mae’s Issuer Performance Scorecard has been somewhat slower than expected, according to agency officials. The reason is unclear but only about 70 issuers so far have registered for Ginnie’s Issuer Operational Performance Profile (IOPP) tool since its launch on Feb. 17, 2015. Officials said they need to sign two-thirds more to get the IOPP system up to full speed. In a recent outreach call, officials urged those issuers who have not yet registered to contact their security officers for authority to access the Ginnie Mae Enterprise Portal (GMEP), the gateway to the IOPP system. Issuers must first be enrolled in GMEP before their security officer can grant them authority to access the IOPP system. The IOPP, also known as the Issuer Performance Scorecard, will rate each issuer’s operational performance and default management and compare them to ...

Study Finds FHA Loans Cost More Than Private Mortgage Insurance

Private mortgage insurance is generally a better deal than FHA for mortgages with 90 percent or higher loan-to-value ratios, according to a new report from WalletHub, a web-based organization that monitors a variety of financial services. The report also found little variation in pricing in the private MI market based on monthly premiums charged by Genworth Mortgage Insurance Co., Mortgage Guaranty Insurance Corp., Radian Guaranty and Essent Guaranty. Of the four MIs in the study, Essent charged the highest premiums for loans with a 620-679 credit score. For all other FICO scores, the MIs charged uniform premium rates. For 97 percent LTV mortgages with a 620-679 credit score, FHA charged a cheaper monthly premium rate compared to private MIs. For 95 percent LTV and 90 percent LTV loans, the FHA charged monthly payments of $218.29 and $206.80, respectively, compared to ...

Around the Industry

Loan Modification Trial Payment Plans for Forward Mortgages. The Department of Housing and Urban Development has announced requirements for trial plan duration, required signatures, and reporting for trial payment-plan agreements, and the conditions under which FHA deems a TPP to have failed.Lenders must implement the requirements in Mortgagee Letter 2015-07 for all TPPs offered to borrowers on or after June 1, 2015. FHA Publishes Additional Sections of HUD Single-Family Policy Handbook. The FHA has published additional sections for the SF Handbook, including the following: Doing Business with FHA – Lenders and Mortgagees Doing Business with FHA – Other participants in FHA Transactions – Appraisers; Quality Control, Oversight and Compliance – Lenders and Mortgagees; Quality Control Oversight, and Compliance – Other Participants in FHA Transactions – Appraisers ...

Poll

With the recent dip in interest rates, how do you feel about loan volumes this year?

We see loan production ending 2015 flat compared to 2014.

36%

We’re optimistic that our originations will rise by 10 to 20 percent year over year.

44%

We’re really optimistic: We expect production to increase by 20 percent or better from last year.

12%

We’re not so bullish. Originations for us may actually fall.

8%

Housing Pulse