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Volume 8 - Number 10

May 15, 2015

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Premium Reduction Helped Fuel 1Q Jump in FHA Loan Production

Price reduction and improving economic factors helped push FHA volume up in the first quarter of 2015, according to an Inside FHA/VA Lending analysis of agency data. Production of forward single-family mortgages insured by FHA increased by 12.3 percent in the first quarter to $39.5 billion from $35.2 billion in the prior quarter, powered by a sharp uptick in refinances. FHA’s total refi business jumped from $2.29 billion in endorsements in February, a month of record snowstorms in the Northeast, to $8.15 billion in March. Total FHA forward-mortgage business rose by 83.8 percent from February, data showed. FHA streamline refis rose a whopping 144.1 percent quarter-over-quarter while conventional-to-FHA refis jumped 29.2 percent over the same period. Falling purchase loan volume, which was the reason for the overall decline in FHA originations last year, spilled over into ... [2 charts]

Robust Refi Activity Propel VA Past Private Mortgage Insurers in 1Q

The Veterans Administration’s home loan guaranty program has racked up some serious refinance numbers in recent months, causing primary mortgage insurers to lose some market share during the first quarter of 2015, according to an Inside Mortgage Finance analysis of guarantor activity. Streamline refinance loans accounted for 59.0 percent of VA loans securitized by Ginnie Mae during the first three months, compared to just 32.8 percent of private MI loans securitized by Fannie Mae and Freddie Mac over the same period. In addition, the VA had the highest average loan size among insured mortgages in the first quarter, approximately 7.2 percent larger than the average loan with private MI. Private mortgage insurers provided coverage on $45.2 billion of mint conventional mortgages during the first quarter, down 5.3 percent from the fourth quarter of last year. VA and FHA originations also increased over the same period by 6.0 percent and 5.5 percent, respectively. FHA forward originations surged ... [1 chart ]

VA, FHA Purchase Applications Up, Refi Loan Applications Decline

The VA share of total loan applications (purchase and refinancing) for the week ending May 8, remained unchanged at 11.9 percent while FHA’s share fell to 13.8 percent from 14.0 percent the week prior, according to the Mortgage Bankers Association’s latest weekly survey of applications. VA purchase loan applications were up a smidgen, 0.2 percent, for the week while FHA purchase applications were up slightly higher, 0.6 percent. Refi applications at both agencies, however, were down for the week – 11.5 percent for FHA and 5.1 percent for VA. Meanwhile, the Rural Housing Service’s share of total applications rose to 0.9 percent as of May 8, from 0.8 percent the week prior. While there was no change in RHS’ share of refi loan applications during the week, its purchase loan applications was up 8.6 percent, a hefty increase for an agency that accounts for only a ...

FHA Delinquency Rate Drops in 1Q, VA Delinquencies, Foreclosures Up

The FHA overall delinquency rate for single-family mortgages fell by 63 basis points to 9.10 percent on a seasonally adjusted basis in the first quarter of 2015 from the previous quarter, while VA loans recorded the only increase across all loan types over the same period, according to the Mortgage Bankers Association. Overall, mortgage delinquencies and foreclosures continued to fall in the first quarter and are now at their lowest levels since 2007, according to the MBA’s quarterly delinquency-rate survey. On a seasonally adjusted basis, the overall delinquency rate fell 14 bps to 5.54 percent from the fourth quarter of 2014, and 57 bps from one year ago, the MBA said. The serious delinquency rate – the share of mortgages that are 90 days or more past due or in foreclosure – likewise fell 28 basis points to 4.24 percent from the previous quarter and down ...

Ocwen Reveals Fair-Value Charge To GNMA MSRs Due to MIP Cut

Mortgage servicer Ocwen Financial, the target of a state enforcement action for allegedly mishandling distressed borrowers, said it would delay its regulatory 10-Q filing because of an impairment charge on Ginnie Mae servicing rights. The impairment was caused by a 50 basis point cut in the FHA’s annual mortgage insurance premium, which took effect in January, the servicer said. Although it had expected a $34.4 million profit in the first quarter of 2015, Ocwen took a $17.8 million impairment charge, which included monitoring costs, “strategic advisor expenses,” and fair-value adjustments. FHA lowered the annual MIP to enable more borrowers to obtain an FHA-insured single-family mortgage loan with a 3.5 percent downpayment. Ocwen would likely lose money if it sold off its government-backed MSRs, according to one servicing advisor. Last fall, Ocwen tried to sell its ...

Mortgages Rank High Among Top Servicemember, Vet Complaints

Making mortgage payments is the most common type of mortgage complaint active servicemembers, veterans or their dependents report to the Consumer Financial Protection Bureau. A recent CFPB report on the top complaints received from military members and their families show that 24 percent were mortgage-related, second to debt collection, which accounted for the highest percentage of complaints received, 39 percent. An estimated 53 percent of servicemember complaints involved mortgage servicing related to loan modifications, collections and foreclosures. The report did not identify any specific loan, although it covered both conventional and government-backed mortgages. Complaints against servicers were mostly about failure to remove or amend derogatory credit reports accrued by servicemembers during the trial period, even though the servicemembers have successfully ...

RHS Final Rule for Certified Loan Application Packagers, Brokers

The Department of Agriculture’s Rural Housing Service has issued a final rule creating a certified loan-application packaging process for the agency single-family loan guaranteed housing program. Published in the April 29 Federal Register, the rule also establishes standards for packagers of loan applications, who are independent from RHS but play a key role in providing Section 502 rural home loan programs to potential homeowners. The final rule will take effect on July 28, 2015. Specifically, the rule addresses the weaknesses in RHS’ loan-application process and integrates the lessons learned from a loan-packaging pilot launched in 2010. The packager gathers and submits the information needed for RHS to determine whether a loan applicant is eligible for ...

HUD System Failed to Identify Ineligible FHA-HAMP Partial Claims

An internal audit of the FHA/Home Affordable Modification Program’s partial-claim option uncovered flaws that cost taxpayers millions of dollars in ineligible claims. According to a recent report by the Department of Housing and Urban Development’s Office of the Inspector General, HUD’s claim-payment controls were inadequate. As a result, the agency paid more than $22 million in unsupported claims and $103,925 in ineligible claims, the report concluded. Auditors said HUD did not design and implement strong safeguards to detect and prevent improper claims. Because of the flaws, the system allowed payment of more than one claim with a modification or FHA-HAMP option in a 24-month period, the report said. In addition, auditors found duplicate claims, partial claims in excess of 30 percent of the unpaid principal balance at initial default, and non-HAMP partial claims after HUD ...

Borrowers Suffer in the Long Run as Servicers Try to Avoid FHA Penalties

Mortgage originators are foregoing lending to borrowers who are more likely to become delinquent to avoid strict and unrealistic FHA timelines and cost limits, according to an Urban Institute study. Results of the study, which was issued in December, were again highlighted during a recent Housing Finance Policy Center seminar on servicing at the Urban Institute in Washington, DC. Citing the study she wrote, Laurie Goodman, director of the HFPC, said regulatory uncertainty and a broken servicer-compensation model were partly responsible for tight credit. The high cost of servicing non-performing mortgages and regulatory uncertainty regarding the treatment of delinquent borrowers have made lenders apprehensive about making loans that have even a slight chance of defaulting, she said. Long foreclosure delays in judicial states, burdensome foreclosure guidelines and apparently ...

PMAC-Blackstone Talks on Hold, Reason for Deal’s Delay Unclear

The Blackstone Group’s bid to acquire VA lender PMAC Mortgage, Chino Hills, CA, appears to have stalled. Talks between the two companies are now on hold and neither firm has commented. An industry source suggested that cash might not be the issue but a “clash of corporate cultures. PMAC Lending Services, which acquired Residential Financial Corp. last year, was ranked 61st on Inside FHA/VA Lending’s top 100 VA lenders in 2014. The company reported $328.2 million in total VA originations last year, reporting an 18.5 percent increase in the fourth quarter from the previous quarter and a 182.1 percent spike in loan volume year-over-year. It accounted for 0.3 percent of the VA market. Blackstone is a global investment firm with nearly $300 billion in assets under management. Last year, the company announced the hiring of 15,000 U.S. veterans across its portfolio companies in ...

Around the Industry

House GOP’s Proposed Budget Rejects IT Administrative Fee, HTF. House Republicans withheld funding for a proposed administrative fee, which the FHA planned to invest in technology to improve quality assurance and reduce paid-claims losses. The Department of Housing and Urban Development first requested authority to collect the fee in the President’s FY 2015 budget request but was turned down. It appears House Republicans are on track again to reject the proposed fee in the FY 2016 appropriations bill, said HUD Secretary Juan Castro. Castro lambasted the House Republicans’ proposed budget cuts, saying they would hinder HUD from carrying out its mission and from investing in communities that most need help. The GOP bill also rescinds funding to the proposed Housing Trust Fund, which allocates a small percentage of Fannie Mae and Freddie Mac profits to ...

Poll

Mortgage originators have been stepping up their hiring of late. Which category of mortgage workers are in highest demand at your shop? (Choose one.)

Loan officers
Processors and underwriters
Compliance
Tech support/programming
Secondary marketing
VP level and higher
We need a good CEO
Other

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