FHA, VA

Browse articles from all of our Newsletters related to FHA, VA.

December 19, 2014 - Inside FHA Lending

Around the Industry

Proposed Data Collection for Evaluating Impact of Pre-Purchase Homeownership Counseling. The Department of Housing and Urban Development has asked the Office of Management and Budget to clear a proposal to collect information for a national study that would gauge the effectiveness of pre-purchase homeownership counseling. Rather than individual telephone interviews, the study plans to conduct focus groups and to collect data regarding the characteristics and performance of participants’ mortgage loans, even after the end of the study. The information collection will involve an estimated 6,000 borrower-participants, 1,800 co-borrowers, 64 counseling organizations and three FHA lenders. The study will be conducted in three cities at a cost of approximately $521,830. The proposal will be published in the ...


December 19, 2014 - Inside FHA Lending

MBA Boycotts FHA Panel Talk for Being too Biased

The Mortgage Bankers Association this week declined to participate in a panel discussion on FHA hosted by the American Enterprise Institute because the trade group did not believe the discussion would be balanced and though it would favor only a certain point of view. The topic was “FHA from 1934 to 1938: Lessons for Wealth Building,” with Ed Pinto, a resident fellow at AEI, and Dave Stevens, MBA president, as presenters. Stevens, however, decided to pull out of the event when he saw the format. In a letter to the AEI organizers, Stevens said he agreed to be a presenter thinking the debate “would be a balanced approach.” “When I first agreed to do this, I did not expect that the format would be 45 minutes of [Ed Pinto] and then no more than 12 minutes for me to respond,” he wrote. “That’s an extremely lopsided approach that did not appear to be ...


December 19, 2014 - Inside FHA Lending

Ocwen Reports FHA Buyouts from Ginnie II Pools

Ocwen Financial’s dry spell of acquiring nonperforming FHA loans out of Ginnie Mae mortgage-backed securities pools ended in early December with the nonbank servicing giant buying $253.1 million of delinquent product. Speculation, however, is mounting that Ocwen may not be long for the Ginnie Mae business, at least as a servicer. Ocwen’s disclosure of the “early” FHA buyouts came 11 days after it sold to an undisclosed buyer. In the first quarter, the company engaged in $646 million of early buyouts (EBO) and followed up with a $490 million EBO deal in the second quarter. However, EBO volume fell to zero in the third quarter. The December acquisition came in one fell swoop raising cautious, short-term expectations at Ocwen. “We expect to execute more such purchases in the next few months, as long as market conditions are favorable,” said Chief Investment Officer John Britti. As fast as it had ...


December 19, 2014 - Inside FHA Lending

FHA Jumbo Originations Surge in 3Q14

Production of FHA-insured jumbo loans ballooned in the third quarter of 2014 reflecting heightened activity in this loan segment during the period. A 23.7 percent quarter-over-quarter surge helped push FHA jumbo lenders’ total volume to $7.71 billion at the end of the nine-month period ending Sept. 30. It was a significant increase for a segment that represents only a sliver of FHA’s overall business. However, compared to last year’s first nine months, volume was down by almost half (48.8 percent) as lenders struggled to keep pace with last year’s output. Strong purchase demand helped drive FHA jumbo originations (all FHA loans over $417,000 up to $625,500 in high-cost areas), as purchase mortgages accounted for 81.1 percent of all FHA jumbos originated during the first nine months of the year. Fixed-rates comprised 86.4 percent of FHA jumbos originated during ... [1 chart]


December 19, 2014 - Inside FHA Lending

OIG Recovers $300M from SunTrust Settlement

The Inspector General of the Department of Housing and Urban Development has announced a $300 million recovery from an earlier settlement between SunTrust Mortgage and the Department of Justice, Consumer Financial Protection Bureau, the HUD Office of the Inspector General, and 50 state attorneys general. The settlement resolved allegations of violations of FHA requirements in a joint complaint filed on June 14, 2014, by federal and state enforcement agencies. The suit against SunTrust alleged misconduct related to the origination and servicing of single-family residential mortgages. The problem loans were uncovered during a routine OIG review of targeted FHA-insured loans. According to the suit, as an FHA direct endorsement lender, SunTrust certified poorly underwritten loans for FHA insurance from January 2006 through March 2012, despite its knowledge of ...


December 19, 2014 - Inside FHA Lending

VA Announces New, Lower Loan Limits in 2015

The Department of Veterans Affairs announced new, lower loan limits for 2015 after Congress decided not to extend the agency’s current maximum lending limits beyond 2014. The current limits will expire on Dec. 31. Under new guidelines, the maximum guaranty amounts for VA loan limits in 2015 will match the lower conforming loan limits established by the Federal Housing Finance Agency for the government-sponsored enterprises next year. These limits range from $417,000 to $625,500, depending on where the borrower is located. VA’s loan limits are tied to the county-based limits established for conforming loans backed by Freddie Mac. Freddie’s loan limits are calculated based on median house prices in counties across the nation. In recent years, VA’s high-cost loan limits have exceeded Freddie’s due to statutory authority granted under the Housing and Economic Recovery Act of 2008. The VA authority was ...


December 19, 2014 - Inside FHA Lending

Congress Shoots Down HAWK, Rejects FHA Fee

Congress denied funding for an enhanced FHA housing counseling initiative for first-time homebuyers and rejected a request for authority to collect a new FHA fee to enhance quality-assurance reviews. President Obama this week signed the FY 2015 Consolidated and Further Continuing Appropriations Act, a comprehensive package of 11 funding bills for federal agencies. The bill does not include the provisions the FHA had sought to toughen enforcement and help lower costs for first-home purchases. The House passed the $1.1 trillion omnibus spending bill, H.R. 83, by a vote of 219-to-206 on Dec. 11, narrowly avoiding a government shutdown. The Senate approved the bill on Dec. 13. The bill allocates $47 million to the Department of Housing and Urban Development’s housing counseling program and $50 million for foreclosure mitigation counseling. It also provides $400 billion in ...


December 19, 2014 - Inside FHA Lending

2015 Outlook: Downward Trend Continues

FHA originations are expected to decline modestly in 2015 unless the agency gives in to industry pressure to lower mortgage insurance premiums and lenders ease up on their overlays, according to analysts. Analysts anticipate no meaningful decline in FHA market share next year but do expect some drop as private mortgage insurance become more competitive, especially among borrowers with 720+ FICO scores. Overall, analysts expect 2015 to be slightly better than 2014 because of increased purchase-mortgage lending, which is partly offset by lower refinance activity. Mortgage volumes should climb to $1.18 trillion in 2015, some say. At Keefe, Bruyette & Woods, analysts Bose George and Chas Tyson predict private MIs will take more market share from the FHA in 2015. They do not expect meaningful policy changes from the FHA this year. For example, FHA has given ...


December 18, 2014 - Inside Mortgage Finance

President Obama Signs FY 2015 Omnibus Spending Bill, Some Rue Failure to Fund HAWK, FHA IT Upgrades

President Obama this week signed a comprehensive package of spending bills, providing funding to federal agencies through fiscal 2015 but missing two initiatives that would have toughened FHA enforcement and benefited new homeowners through enhanced housing counseling. The FY 2015 Consolidated and Further Continuing Appropriations Act is comprised of 11 funding bills for all federal agencies, including the Department of Housing and Urban Development. The bill provides...


December 18, 2014 - Inside Mortgage Finance

Mortgage Financing for Home Purchases Gaining Share from Cash Financing on a Yearly Basis

As the share of investors purchasing homes declines, mortgage financing continues to take market share from cash financing for home purchases, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Non-cash financing was used on 72.4 percent of home purchases in November, based on a three-month moving average. That’s up from a 70.7 percent share in November 2013 and a share as low as 66.9 percent in March 2012. Prior to the housing crisis, the non-cash share of total home sales averaged...


December 18, 2014 - Inside Mortgage Finance

CBO Projects Lenders Will Shift Some of Their Business Away from the GSEs in Coming Years

Lenders are likely to shift some of their business away from the government-sponsored enterprises and into the non-agency market in the coming years, regardless of GSE reform efforts, according to a report released this week by the Congressional Budget Office. “With house prices expected to trend upward, the balance sheets of lenders and investors should improve, as should borrowers’ financial positions,” the nonpartisan provider of analysis for Congress said. “Consequently, CBO projects that private companies will become more willing to make new loans and demand lower fees to compensate for the credit risks they take, which will reduce Fannie Mae and Freddie Mac’s pricing advantage over their private competitors.” If the private sector bears more mortgage credit risk, the CBO said...


December 12, 2014 - Inside The GSEs

Analysts See Better Deal In GSE 97s Than in FHA

The 3 percent downpayment mortgages announced this week by Fannie Mae and Freddie Mac should be a better deal than similar FHA financing for stronger-credit borrowers, according to analysts. Final details of the conventional 97 loan-to-value ratio products were released this week to mixed but mostly favorable reviews. Although aimed at first-time homebuyers in Fannie’s MyCommunityMortgage and Freddie’s Home Possible programs, the products are also available for refinances of existing GSE loans. Only 30-year, fixed-rate loans are eligible and the home must be the borrower’s primary residence. In Fannie’s case, borrowers who go through MCM would pay lower upfront loan-level price adjustments. Freddie requires that the loans go through Home Possible. Analysts with FBR Capital Markets said the government-sponsored enterprises’ ...


December 11, 2014 - Inside Mortgage Finance

Fannie and Freddie Roll Out Much-Anticipated 3 Percent Downpayment Option, Mortgage Industry Response Tepid

Fannie Mae and Freddie Mac this week officially announced 97 percent loan-to-value ratio programs to a mixed industry response. Fannie’s low-downpayment option will be available through its MyCommunityMortgage program, as well as for refinances and other non-MCM mortgages. Freddie will offer its 3 percent downpayment product as a purchase or no-cash-out refinance in its Home Possible Advantage program. The biggest difference between the two is...


December 11, 2014 - Inside Mortgage Finance

Jumbo Originations Continued to Shine in 3Q14 With Boost From Agency-Conforming Activity

Jumbo mortgage lending and securitization remained one of the bright spots in the home-loan business during the third quarter of 2014, according to a new Inside Mortgage Finance analysis. A total of $81.8 billion in mortgages exceeding the traditional $417,000 conforming loan limit were produced during the third quarter, up 15.4 percent from the second quarter of 2014. Total mortgage originations were up 11.3 percent over the same period. Total jumbo activity included...[Includes three data charts]


December 5, 2014 - Inside FHA Lending

Around the Industry

Final PMIERS Rule Expected in 1Q15. The Federal Housing Finance Agency has revised its timeline for publishing a final version of the Private Mortgage Insurance Eligibility Requirements, which Fannie Mae and Freddie Mac proposed in July at the direction of the FHFA. The PMIERS will establish capital and other requirements for private mortgage insurers. In a statement, industry trade group U.S. Mortgage Insurers said it has received word from the agency that the final PMIERS would not be published until at least late in the first quarter of 2015. The FHFA initially indicated that a final rule would be issued by yearend 2014. The USMI reiterated its support for an updated PMIERS. Mortgage Executives Concerned About G-Fee Increase. A survey of mortgage executives at this year’s Mortgage Bankers Association annual conference found 53 percent saying that ...


December 5, 2014 - Inside FHA Lending

Waiver of Condo Approval Requirements Extended

The FHA has extended a temporary waiver of insurance requirements to allow certain condominium projects or developments that otherwise would not qualify for mortgage insurance to remain eligible. Temporarily waiving provisions pertaining to master/blanket hazard, flood, liability and other insurance requirements will help ensure the availability of affordable housing units, including condos, to people who cannot afford to purchase a home or could not qualify for a mortgage loan, the agency said. The temporary waiver was issued on Nov. 27, 2013, and now has been extended to Aug. 31, 2016. It allows individual-unit owners to obtain and maintain their own insurance coverage on their condo unit. The waiver also requires condo projects to maintain a master/blanket insurance policy for hazard, flood and liability risks and any other insurance that may be ...


December 5, 2014 - Inside FHA Lending

30-60 Days Uptick Raises FHA Delinquency Rate

The delinquency rate for FHA-insured single-family mortgages increased slightly from June through September, with a slight uptick in the percentage of loans 30 to 60 days past due, according to an Inside FHA Lending analysis of agency servicing data. As of Sept. 30, FHA delinquencies across the board rose to 13.57 percent from 13.31 percent at midyear due to a slight pickup in 30- to 60-day delinquencies over the three-month period. The share of loans 30- to 60-days delinquent stood at 6.55 percent as of Sept. 30, up from 6.17 percent on June 30. Serious delinquencies dropped slightly to 7.02 percent from 7.14 percent over the same period as the FHA’s inventory of legacy loans continued to clean out and the more recent vintages continued to perform well. The overall foreclosure rate for FHA-insured loans fell to 2.15 percent from 2.30 percent, reflecting the ... [1 chart]


December 5, 2014 - Inside FHA Lending

Use of Fair Value in Foreclosure Sales Required

Unless contravened by another federal or state statute or jurisdiction, FHA lenders must use the agency’s adjusted fair market value (AFMV) for all foreclosure sales and post-foreclosure sales associated with defaulted FHA loans, according to the FHA. The FHA said it issued guidance because more lenders are using FHA procedures regarding claims without conveyance of title. Before applying the AFMV, lenders must ensure that th loan’s FHA insurance is still active and that the loan is not subject to indemnification. Both items may be verified by checking Neighborhood Watch. Working with the borrower, the lender must make sure that all possible applicable home-retention and loss-mitigation options have been considered and explored before moving to an AFMV alternative. In addition, the lender must determine that the borrower’s case does not meet the criteria for a pre-foreclosure sale or deed-in-lieu of foreclosure. Mortgagees may not proceed with any foreclosure sale until ...


December 5, 2014 - Inside FHA Lending

Lenders Confused Over HUD’s Stance on LPI

A provision on lender-placed insurance in the servicing segment of the FHA’s draft Single Family Housing Policy Handbook appears to contradict the agency’s previously stated position on LPI, according to the American Bankers Association. The ABA urged the FHA to retain the current policy regarding a lender’s discretion in requiring hazard and flood insurance for loans the agency insures. In a comment letter, the ABA expressed concern about the FHA’s new proposed standard for LPI, which could limit the amount of LPI coverage a lender or servicer could impose on a borrower to the outstanding balance of the loan. It would apply broadly to hazard insurance, including flood insurance. There are several problems with this approach, the ABA said. The group noted that Congress had established a standard which requires any home construction in a special flood hazard area (SFHA) to obtain “at least” ...


December 5, 2014 - Inside FHA Lending

FHA to Share in Landmark BofA Settlement

The FHA and Ginnie Mae will share in the record-setting $16.7 billion settlement between Bank of America, the Department of Justice and certain other federal agencies and six states to resolve claims related to mortgage fraud and toxic mortgage-backed securities. The FHA will receive approximately $800 million and an undisclosed amount for consumer relief from BofA. The bank was accused of falsely certifying poorly underwritten loans for FHA insurance, resulting in huge losses for the agency. It is unclear how much Ginnie Mae’s share would be from the settlement. “As a direct endorser of FHA-insured loans, Bank of America performs a critical role in home lending,” said U.S. Attorney Loretta Lynch for the Eastern District of New York during the announcement of the global settlement in August. “In obtaining a payment of $800 million and sweeping relief for troubled homeowners, we have not ...


December 5, 2014 - Inside FHA Lending

FHA: Loan Limits Same for 2015

The FHA has announced loan limits in 2015 for high- and low-cost areas, virtually unchanged from the loan limits in effect through the end of the year. The new limits will take effect on Jan. 1, 2015. The maximum loan limits in high-cost housing areas will remain the same as the 2014 level of $625,500. The current standard loan limit in lower-cost areas will also remain unchanged at $271,050. The mortgage loan limits for Home Equity Conversion Mortgage loans will continue to have a maximum claim amount of ...


December 5, 2014 - Inside FHA Lending

Groups Oppose FHA Quality Assurance Fee

Reports that the Senate Appropriations Committee might include a proposed FHA administrative fee in the Senate’s spending bill for financial and housing agencies is causing a furor within the mortgage financing industry. Industry groups have come out in force, urging the leaders of the Senate committee to remove the provision from a continuing resolution to fund the government beyond Dec. 11. There is speculation that the House might go along with the fee. The provision, expected to raise $30 million for FHA quality assurance efforts, would allow the Department of Housing and Urban Development to charge a fee of no more than 4 basis points of the original principal balance of all FHA-insured mortgages a lender made in the previous fiscal year. HUD originally made the request in President Obama’s proposed FY 2015 budget. Over industry objections, the Senate later incorporated the ...


December 5, 2014 - Inside FHA Lending

Accounting of Settlement Receivables Spotty

The FHA’s accounting of receivables from settled legal claims and partial claim notes is so sloppy that the exact amount collected might be difficult to gauge, according to an internal audit of the agency’s FY 2014 and 2013 financial statements. Conducted by the Department of Housing and Urban Development’s Inspector General, the audit concluded that the FHA had booked receivables from seven cash settlements totaling $1.2 billion in FY 2014 but collected only $466.4 million of those settlements. In addition, during fiscal 2014, as part of its loss mitigation efforts to bring delinquent loans current, the FHA paid $4.4 billion to lenders for partial claims but never received the required promissory notes from the lenders for $1.5 billion of the claim payments. FHA rules require lenders to provide the agency with promissory notes for the payments made or ...


November 26, 2014 - Inside Mortgage Trends

Mortgage Execs Concerned About G-Fee Increase

The majority of mortgage industry executives believe a proposal to raise Fannie Mae and Freddie Mac guaranty fees will hurt lenders, raise origination costs and lead to fewer loans being made, according to a survey by Genworth U.S. Mortgage Insurance. “The survey findings were in line with expectations and highlight the need for continued dialog on regulatory reform and credit access,” said Rohit Gupta, president/CEO of the company. An estimated 53 percent of executives believe raising the g-fees would result in fewer loans being closed. And 23 percent of executives said higher fees for the government-sponsored enterprises would increase demand for FHA loans. While 13 percent said an increase would limit industry competition, 11 percent said it would stoke competition. ...


November 24, 2014 - Inside the CFPB

Bureau Warns Mortgage Lenders Against SSDI Discrimination

The CFPB put out a bulletin last week advising lenders not to create illegal hurdles for recipients of Social Security Disability Income who apply for mortgages, warning that requiring unnecessary documentation from such consumers could raise fair lending risk. The new bulletin discusses standards and guidelines on verification of SSDI, including those under the CFPB’s ability-to-repay rule, the Department of Housing and Urban Development’s standards for FHA loans, the Department of Veterans Affairs’ standards for VA-guaranteed loans, and guidelines from Fannie Mae and Freddie Mac. The bureau begins by noting that to verify income for qualified mortgage debt-to-income ratios under the ability-to-repay rule, lenders are required to look at whether the Social Security Administration benefit verification letter or equivalent document ...


November 21, 2014 - Inside FHA Lending

Strong 3Q Pushes Up FHA’s Nine-Month Total

FHA lenders capped a nine-month production run with a total of $99.39 billion in forward mortgages, thanks to a strong push in the third quarter of 2014, according to Inside FHA Lending’s analysis of agency data. Third-quarter production totaled $38.3 billion, up 16.6 percent from the previous quarter. Year-over-year originations, however, were off by 43.0 percent. FHA endorsements have now fallen from a peak of 1.8 million loans in FY 2009 to approximately 786,000 in FY 2014, according to the latest independent actuarial review of the health of the Mutual Mortgage Insurance Fund. The 57 percent reduction in endorsements takes FHA closer to the lower levels of activities seen just prior to the housing bubble, the report noted. A sharp decline in refi activity drove the substantial drop in forward loan endorsements in fiscal 2014. Previously, many homeowners ... [1 chart]


November 21, 2014 - Inside FHA Lending

Around the Industry

Essent EVP to Retire in March. Adolfo Marzol, Essent Guaranty’s executive vice president, will step down, effective March 31, 2015, after five years with the company. VA Hybrid Adjustable-Rate Mortgage Pooling Eligibility. The Department of Veterans Affairs recently expanded the type of loans it will guarantee to include 7/1 and 10/1 hybrid ARMs. While Ginnie Mae’s Mortgage-Backed Securities Guide does not bar the inclusion of hybrid ARMs in Ginnie MBS, GinnieNET is not currently able to process these loans for pool processing. GinnieNET is being updated in order to accommodate VA 7/1 and 10/1 hybrid ARM pooling. Effective with issuances dated on or after Dec. 1, 2014, VA 7/1 and 10/1 hybrid ARMs will be eligible for pooling. CFPB Publishes Revised List of Rural and Underserved Counties. The Consumer Financial Protection Bureau has published its 2015 list of ...


November 21, 2014 - Inside FHA Lending

FHA Short Refi Production Declines in 2014

The number of underwater borrowers seeking to refinance their conventional mortgages into an FHA loan fell in fiscal 2014 from the previous year, according to an Inside FHA Lending analysis of agency data. The number of endorsements under the FHA Short Refinance program totaled 1,327 at the end of fiscal 2014, down from a record 1,662 in the prior year. Endorsements hit their peak in fiscal 2013. A total of 5,140 distressed conventional loans with a combined original mortgage amount of $784.9 million were refinanced under the program over the five-year period. In order to participate, borrowers must be current on their mortgage payments, have a credit score of 500 or greater and owe at least 15 percent more on the property than their home is actually worth. Lender participation is strictly voluntary. More importantly, the lender or investor must be ...


November 21, 2014 - Inside FHA Lending

GNMA Eyes Stronger Oversight of Nonbank Issuers

Ginnie Mae is seeking comment on several proposed data collections, including those that would strengthen the agency’s ability to monitor participants in its mortgage-backed securities programs. Due to its growing concern over the influx of non-depository issuers into the single-family MBS program, Ginnie has proposed to collect more loan-level data to supplement the information already being collected and reported on a monthly basis. The proposed data collection consists of bankruptcy-related information (action type, case identifier, chapter type, bar date) as well as borrower-related information (borrower bankruptcy indicator, classification type, total mortgaged properties, counseling initiated indicator and credit score date). Other proposed new data include document custodian ID, type of insurance claim coverage, investor unpaid principal balance (UPB), adjustment to ...


November 21, 2014 - Inside FHA Lending

Congress Urged to Extend Expiring VA Loan Limits

Thousands of military veterans in high-cost areas may be deprived of VA’s home-loan guarantee benefits unless Congress extends the current VA loan limits before the end of the year. Those loan limits expire on Dec. 31, 2014. The VA loan limits are based on median home values estimated by the FHA, providing loans up to 125 percent of local area median price. The program does not set a cap on how much a veteran can borrow to finance a home purchase but it does limit the maximum amount it can guarantee to 25 percent of the current loan limit. Veteran and industry groups are urging Congress to make the VA limits permanent. A VA spokesperson said the agency was not asked for a position on the issue since Congress did not put forward any bill in any of the hearings this year. “But as a general rule, VA wants to maximize the opportunities ...


November 21, 2014 - Inside FHA Lending

Wells Fargo, DOJ Settlement Talks Hit Wall

Wells Fargo and the Department of Justice are reportedly at an impasse in their settlement talks in connection with a lawsuit accusing the bank of improper underwriting and false certification of certain FHA-insured loans. In an e-mailed statement to Inside FHA Lending, a bank spokesperson said Wells Fargo’s good faith effort to work with the federal government to resolve the complaint “has not yet resulted in a settlement.” Nonetheless, the bank “will move forward with presenting [its] case in support of [its] prudent and responsible FHA lending practices, which have produced high-quality FHA loans with delinquency rates that are half the industry average,” the spokesperson added. This week, citing an unidentified source, Bloomberg reported that lawyers for the government and the bank have told the presiding judge in the case that they ...


November 21, 2014 - Inside FHA Lending

HECM Portfolio Down to Negative in FY 2014

The economic value of the FHA’s Home Equity Conversion Mortgage legacy portfolio fell to negative $0.9 billion in fiscal 2014 due mainly to volatility in long-term house prices and interest rates, according to the latest independent actuarial report on the health of the Mutual Mortgage Insurance Fund. The latest result was a significant improvement from FY 2012, when the fund stood at negative $2.8 billion. In fiscal 2013, the HECM portfolio’s economic value of positive $6.5 billion appeared to be a whopping change from the previous year but that amount reflected a $4.6 billion cash infusion from the forward program and from the $1.7 billion mandatory appropriation, the report clarified. The report also showed a corresponding decline in the HECM capital ratio to negative 1.20 percent. Actuarial projections for fiscal 2015 place the HECM portfolio’s economic value at negative $1.1 billion. The fund’s capital resources for ...


November 21, 2014 - Inside FHA Lending

MMIF Value, Capital Ratio Turns Positive

FHA Mutual Mortgage Insurance Fund ended fiscal 2014 in the black but was still far short of its statutory reserve requirement, prompting critics in Congress to renew their cries for FHA reform. An independent actuarial report sent to Congress this week showed that the MMI Fund now stands at $4.8 billion after a gain of nearly $6 billion over the last year. For the first time since 2009, the fund’s capital ratio also crossed into positive territory at 0.41 percent, up 52 basis points from the negative 0.11 percent posted in fiscal 2013. Overall, the economic value of the fund has risen by $21 billion over the last two years because of the aggressive steps the agency took to stabilize and strengthen the fund, the report said. Policy changes led to improved underwriting for single-family mortgages, increased mortgage insurance premiums, stronger loss mitigation policies and higher recoveries, it added. In addition, with ...


November 20, 2014 - Inside Mortgage Finance

Delinquency Rates Nudges Higher in Seasonal Shift, Adjusted Rate at Pre-Crisis Levels

Mortgage delinquencies followed a seasonal trend and rose in the third quarter of 2014, according to the Inside Mortgage Finance Large Servicer Delinquency Index. The Mortgage Bankers Association, however, reported a 19 basis point drop on a seasonally-adjusted basis that put the overall rate at 5.85 percent, the lowest since the financial crisis. The 24 lenders that reported delinquency data to Inside Mortgage Finance had an average delinquency rate of 6.63 percent, up from 6.54 percent in the second quarter. Unadjusted delinquency rates usually spike higher in the third quarter, even in the midst of a downward trend. The delinquency index also showed...[Includes one data chart]


November 20, 2014 - Inside Mortgage Finance

Lower-Downpayment Mortgages Seen As Useful Products For First-Time Homebuyers, Though Fees are a Concern

First-time homebuyers could benefit from mortgages with downpayment requirements as low as 3.0 percent, but high fees on such products tend to limit their originations, according to qualitative survey results from the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. The government-sponsored enterprises are set to roll out products that allow combined loan-to-value ratios as high as 97.0 percent, competing with the 96.5 percent combined LTV ratio limit for certain purchase mortgages guaranteed by the FHA. In recent years, the GSEs generally have allowed for combined LTV ratios as high as 95.0 percent. “Agents commonly believe...


November 20, 2014 - Inside Mortgage Finance

FHA Mutual Mortgage Insurance Fund Capital Turns Positive, But No Change to Mortgage Insurance Premiums

The FHA Mutual Mortgage Insurance Fund has improved from a negative position to a positive $4.8 billion in FY 2014 after gaining nearly $6 billion in value over the last year, thanks to aggressive policy actions that led to improvements in key areas, according to an independent actuarial report sent to Congress this week. Overall, the fund showed a $21 billion improvement over the past two years due to changes the FHA implemented following the housing crisis, the report said. The changes led to improved underwriting standards for single-family mortgages, increased mortgage insurance premiums, stronger loss mitigation policies and higher recoveries, it noted. Aggressive policy actions also led...


November 13, 2014 - Inside Mortgage Finance

New Fannie 97 to be Based on Current Underwriting And Documentation Rules, Private MI Assessment

Income documentation and other standards that have been in place since Fannie Mae entered conservatorship in 2008 will apply to the company’s new 3 percent downpayment product, and loan assessment by a private mortgage insurer will be crucial, according to a company spokesman. The spokesman said details will be announced shortly. Fannie Mae is working with the Federal Housing Finance Agency to design the government-sponsored enterprise’s revamped 97 percent loan-to-value product. Sources said previous requirements for a standard 97 LTV product, which Fannie offered until November 2013, are being considered. The FHFA announced...


November 13, 2014 - Inside Mortgage Finance

Wells Fargo Seeking Resolution of FHA Fraud Allegations, Experts Doubt DOJ Will be Less Aggressive Going Forward

Wells Fargo is in discussions with the Department of Justice about a possible resolution of alleged improper origination and servicing of FHA loans that resulted in huge paid claims and significant losses to the agency’s Mutual Mortgage Insurance Fund. The ongoing talks are related to a complaint filed by the government in federal district court in Manhattan on Oct. 9, 2012, alleging, among other things, that Wells Fargo improperly certified FHA mortgages between 2001 and 2010 for insurance even though it knew the underwriting was flawed. The complaint said that the bank’s insurance claims should not have been paid when some of the loans later defaulted. It further alleged that Wells Fargo did not disclose the loans’ deficiencies to the FHA before making insurance claims. On Dec. 1, 2012, Wells Fargo filed...


November 13, 2014 - Inside Mortgage Finance

Private MIs See Huge Gain in Market Share As FHA Continues to Fall Behind in 3Q14

Private mortgage insurers reported hefty increases in the volume of new insurance written during the third quarter of 2014, according to a new Inside Mortgage Finance ranking and analysis. The seven active private MIs wrote primary insurance coverage on $53.95 billion of new mortgage originations during the third quarter, a gain of 22.8 percent from the previous period. On a year-to-date basis, total new primary insurance by the MIs was still down 22.4 percent from the first nine months of last year, mostly because activity in the Home Affordable Refinance Program has declined sharply. HARP accounted...[Includes three data charts]


Poll

What will Fannie Mae’s and Freddie Mac’s new 97 LTV programs mean for your business?

It will give our business a big boost as there is a lot of pent up demand for the product.
It will have only a minor impact on our overall business as we already are doing high LTV business through FHA and some of our high LTV FHA business is likely to shift to Fannie and Freddie.
It won’t have any impact on our business as we plan to steer clear of all high LTV business – particularly in the GSE market.

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