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

October 2, 2015 - Inside FHA/VA Lending

FHA Clamps Down on Partial Claims Delay, Insists on Timely Submission

The FHA has revised the required time frame for mortgagees to submit the original promissory note associated with a partial claim and laid out the penalties for noncompliance. The guidance became effective on Sept. 1, 2015. On the same day, The Department of Housing and Urban Development issued letters demanding full reimbursement of all amounts associated with overdue partial-claim documents after Sept. 1. The guidance also reminded lenders of the procedures for preparing and submitting partial-claim documents to HUD’s loan-servicing contractor. Proper recordation and submission of partial-claim documentation will ensure HUD’s interest is protected, according to the guidance. Currently, FHA has a high volume of missing partial-claim documents due to lenders’ failure to follow rules for recording and submitting security instruments. The revised guidance also contains directions for executing partial-claim docs and reconciling ...

October 2, 2015 - Inside FHA/VA Lending

GNMA Revises Requirements for Change-of-Business Status Pleas

Ginnie Mae has announced revised rules for issuers seeking approval of changes in their business status due to an adversarial relationship with agencies, mergers, asset transfers or a change in ownership or control. The agency has been receiving many issuer requests and they are getting complicated, according to Ted Tozer, Ginnie Mae president. Issuers must comply with the updated guidance in order to remain an eligible participant in the Ginnie Mae mortgage-backed securities program. The guidance took effect immediately. Previously, issuers were required to notify Ginnie Mae in writing within five days of any material adverse change in their business relationships with Fannie Mae, Freddie Mac, FHA, VA, Rural Development, the Department of Housing and Urban Development’s Office of Public and Indian Housing or any other regulatory agency. Under the revised guidance, the ...

October 2, 2015 - Inside FHA/VA Lending

FHA Prioritizes Certification, PACE, Delayed Claims Filing, MMI Fund

The FHA has a number of rulemakings in the regulatory pipeline and other policy topics related to mortgage origination and servicing, all lined for action in the fall. The program changes are geared towards FHA single-family priorities, such as expanding first-time homebuyers’ and underserved creditworthy borrowers’ access to credit, ensuring the long-term viability of FHA Mutual Mortgage Insurance Fund and making it easier to do business with the FHA. Agency data show that, as of July 31, 2015, first-time homebuyers accounted for 82 percent of FHA purchase loans compared to 72 percent in the prior year. FHA officials attributed the surge in purchase loans to the half percentage point reduction in the annual mortgage insurance premium, which they translated into a yearly savings of $900 for a household with an average mortgage-loan size of $180,000. On Sept. 15, the ...

October 2, 2015 - Inside FHA/VA Lending

Unique VA Lender Extends Service To Middle East Combat Zones

VA lender Michigan Mutual in Southfield, MI, gives new meaning to “service above and beyond,” which makes it unique among its VA peers. Michigan Mutual, a national wholesale mortgage lender, ramps up its service to members of the military by having a representative conduct yearly outreach to American soldiers in Afghanistan and Iraq. Every year, since 2009, Rick Roque, managing director at Michigan Mutual, has been volunteering to spend a few weeks conducting mortgage-related seminars for soldiers in U.S. bases in the two countries. During those seminars, Roque talks about the benefits of a VA-guaranteed mortgage loan for those thinking of purchasing a home after their deployment. “Soldiers in combat zones are constantly under severe stress and hardly have time to think about homeownership,” said Roque. “Their priority is survival and ...

October 2, 2015 - Inside FHA/VA Lending

VA Clarifies Handbook’s Effective Date, Modifications, Claims Filing

VA loan servicers have until Nov. 1, 2015, to review and comment on the new VA Servicer Handbook and ensure compliance with the established policy and guidelines. The servicer handbook combines guidance issued via circulars and news flashes over the years. In addition, the agency has started hosting biweekly servicer calls to update VA servicers on policy changes and new developments, according to Andrew Trevayne, assistant director of loan management with the VA Home Loan Guaranty Program. VA-guaranteed loans are serviced through the VA Loan Electronic Reporting Interface (VALERI) system. The handbook also discusses roles and responsibilities for VA loan-administration staff and servicers. It does not change or supersede any regulation or law affecting the loan program. Servicers may submit comments on the updated handbook to ...

October 2, 2015 - Inside FHA/VA Lending

2014 HMDA Data Show Huge Chunk of Higher-Priced FHA Loans

The majority of higher-priced first-lien loans in 2014 were FHA-insured, according to the latest Home Mortgage Disclosure Act data. Approximately 45 percent of FHA-insured, first-lien purchase mortgages had annual percentage rates in excess of the reporting threshold, similar to the percentage in the latter half of 2013, the Federal Financial Institutions Examination Council noted. Higher-priced loans are those with APRs that exceed the average prime offer rate by at least 1.5 percentage points for first-lien loans and at least 3.5 percentage points for subordinate-lien loans. The data on the incidence of higher-priced lending show that about 8 percent of first-lien purchase loans originated in 2014 have APRs that exceed the loan-price reporting thresholds, up from about 5 percent in 2013, the FFIEC said. The higher APRs for FHA loans were due to a slight increase in ... [ 1 chart ]

October 2, 2015 - Inside FHA/VA Lending

HUD Slams loanDepot for Using Ineligible DPA Funds on FHA Loans

The Inspector General of the Department of Housing and Urban Development called for civil and administrative actions against loanDepot for allowing ineligible “gifts” on FHA-insured loans. Acting on a referral from HUD’s Quality Assurance Division, the IG focused on FHA loans originated by loanDepot that included downpayment assistance from the Golden State Finance Authority. A review of 75 loans endorsed from Oct. 1, 2013, to Jan. 31, 2015, determined that 62 loans involved gift funds that did not comply with FHA requirements. In addition, the privately held nonbank lender “inappropriately charged borrowers $25,700 in fees that were not customary or reasonable, as well as $46,510 in discount fees that did not represent the purpose of the fee,” the IG said. The IG blamed loanDepot’s overreliance on Golden State’s Platinum Downpayment Assistance Program as well as ...

October 2, 2015 - Inside FHA/VA Lending

MBA Chief Reveals Ongoing Talks Between Independent Shops, HUD

Certain unidentified independent mortgage bankers are in talks with the Department of Housing and Urban Development over alleged False Claims Act violations, according to a top mortgage industry executive. Speaking recently on the Internet radio program “Lykken on Lending,” Dave Stevens, president of the Mortgage Bankers Association and a former FHA commissioner, said the lenders are quietly negotiating and have avoided media attention, so far. On air, Stevens said he and a “certain group of individuals had met with HUD Secretary Julian Castro” to discuss the FCA complaints. The MBA official said the use of the FCA – which allows for treble damages – represents an “extraordinary overreach” by the government that is threatening the overall FHA program. Stevens did not name the lenders are or say how many there are, but he did mention an ...

October 2, 2015 - Inside FHA/VA Lending

GNMA Posts Record Quarter as VA Jumbos Drive MBS Issuance

Riding a wave of heavy purchase-mortgage activity, Ginnie Mae issuers produced a record $128.23 billion of single-family mortgage-backed securities during the third quarter of 2015, according to a new Inside FHA/VA Lending ranking and analysis. The third-quarter figure, which includes FHA home-equity conversion mortgage MBS, was up 6.5 percent from the second quarter of this year. The previous record was $125.68 billion, set back in the third quarter of 2009. Loan-level MBS data, which do not include HECMs and have truncated loan amounts, show hefty gains in purchase-mortgage activity that more than offset sharp declines in refinance business. The flow of FHA purchase mortgages jumped 37.7 percent from the second to the third quarter, and VA purchase mortgages were up 37.9 percent over the same period. Meanwhile, refinance volume fell ... [ 2 charts ]

September 25, 2015 - Inside Mortgage Trends

Correspondents Key to Purchase-Mortgage Market

Correspondent lenders generated 32.1 percent of the home loans securitized by Fannie Mae, Freddie Mac and Ginnie Mae during the second quarter of 2015. More than either other channel, correspondents excelled at finding homebuyer borrowers, 51.9 percent of their second-quarter production, while refinance loans accounted for 56.5 percent of total agency business. Heavy purchase-mortgage volume meant correspondent loans had lower ... [Includes one data chart]

September 25, 2015 - Inside MBS & ABS

GNMA to Evict Dormant MBS Issuers; MBA Chief Objects to Agency’s Comments on Strained Resources

Nearly 100 approved issuers will be dismissed from the Ginnie Mae MBS program for failing to be active participants, according to a top agency official. Michael Drayne, senior vice president and head of the Office of Issuer and Portfolio Management at Ginnie Mae, said the agency is currently working through all of the Ginnie I (multifamily) and Ginnie II (single family) issuers that have not issued a single security since their approval. Drayne estimated...

September 24, 2015 - Inside Mortgage Finance

FHA Firm on Insurance Termination Penalty for Missed Claim-Filing Deadline but Will Remain Flexible, Says Official

The FHA will consider stakeholders’ concern about its proposal to terminate a lender’s mortgage insurance contract for missing a yet-to-be-finalized deadline for filing claims, an agency official said. For now, however, the agency remains adamant about letting the provision stand despite stakeholder complaints about its severity, said Ivery Himes, director of the Office of Single Family Asset Management at FHA, during a panel discussion this week at the Ginnie Mae annual conference in Arlington, VA. She said missed deadlines are costly and are putting a strain on the agency’s resources. Himes blamed...

September 24, 2015 - Inside Mortgage Finance

Ginnie Mae’s Tozer Calls Upon FHA to Find Workable Middle Ground for Loan Certification

Ginnie Mae President Ted Tozer is urging the FHA to find some flexibility in its loan-level certification proposal that would balance the need to protect the FHA from losses with lenders’ ability to lend without fear of consequences. Tozer said the controversial FHA proposal is trying to find a middle road between protecting the Mutual Mortgage Insurance Fund and making lenders feel confident that they are accountable only for the most egregious problems and not for small oversights or technical errors. “It is...

September 18, 2015 - Inside FHA/VA Lending

HUD Collects on Whatever is Left of TBW – A Mere Slice of FHA Losses

The Department of Housing and Urban Development recently saw its long-running attempt to recover $179 million from a bankrupt FHA lender come to a disappointing close, receiving only a little over half-a-million dollars after liquidation. HUD’s Inspector General gave the agency the green light to book its share of funds available to pay an $89.9 million HUD claim against the now-defunct lender Taylor, Bean & Whitaker, ending further action against the company. In 2006, whistleblowers filed a “qui tam” lawsuit in federal district court in Georgia alleging that TBW and Home America Mortgage had falsely certified and approved poorly underwritten loans for FHA insurance. In 2009, the two mortgage lenders filed for bankruptcy separately but were later consolidated by the court into one bankruptcy case. In May 2010, the Department of Justice, on behalf of HUD, filed a ...

September 18, 2015 - Inside FHA/VA Lending

HECM Lending Rises in First Half, HMBS Issuance Up Same Period

FHA lenders funded $7.8 billion in new Home Equity Conversion Mortgage loans during the first half of 2015, up 8.2 percent from the same period a year ago. HECM loan production was slower in the second quarter with originations down 1.1 percent from the prior quarter. Purchase loans accounted for 86.1 percent of all HECM transactions during the first six months. Interestingly, borrower bias against adjustable-rate loans appeared to have eased. Fixed-rate HECMs accounted for only 15.4 percent of originations during the first half of the year. Initial principal amount at loan origination totaled $4.6 billion over the same period. On a fiscal year-to-date basis, the FHA reported a total of 53,372 HECM endorsements, up from 47,662 HECM endorsements in fiscal YTD 2014. Meanwhile, HECM endorsed cases increased to 5,750 in August compared to ... [ chart ]

September 18, 2015 - Inside FHA/VA Lending

HECM Servicer to Pay $29.6 Million To Resolve False Claims Violations

A major player in the Home Equity Conversion Mortgage market has agreed to pay $29.6 million to resolve allegations of submitting false claims related to the servicing of FHA-insured reverse mortgages. According to the Department of Justice, Walter Investment Management Corp., through its mortgage subsidiaries, violated the False Claims Act by submitting false claims for debenture interest from the Department of Housing and Urban Development. A debenture is a type of debt instrument not secured by physical assets or collateral. It is backed only by the issuer’s general creditworthiness and reputation. HUD requires lenders to self-report curtailment of debenture interest if it misses any foreclosure deadlines. Under the HECM program, a loan becomes due and payable when the home is sold, remains vacant for more than 12 months or upon the ...

September 18, 2015 - Inside FHA/VA Lending

Housing Think Tank Suggests Steps To Make Loan Cert Proposal Work

The FHA should make further adjustments to its latest loan-level certification proposal to fully achieve its aim of limiting lenders’ False Claims Act liability, according to an Urban Institute analysis. As drafted, the agency’s proposed measures to limit liability to errors that lenders can and should avoid appear to fall short of their objective, wrote UI Senior Fellow Jim Parrott. He urged the FHA to make the small changes needed to align the severity of penalties (indemnifications, huge settlements) with the gravity of the mistakes. Many FHA lenders have restricted their lending and imposed overlays partly because of uncertainty in how the agency enforces its underwriting rules. Lenders agree with the need for tougher enforcement against mortgage fraud and misrepresentations that have cost the FHA insurance fund millions of dollars in losses. However, even a minor mistake or a ...

September 18, 2015 - Inside FHA/VA Lending

Frustration Prompts Wells Fargo to Reinstate Overlays on FHA Loans

Wells Fargo this week reinstated the 640 minimum credit score requirement, following through on its threat to re-impose credit overlays due to its frustration with FHA’s republished loan-level certification proposal. Officials said the re-proposed version of the proposal, which was initially issued for comment in May, still disappoints in spite of industry input to put concerned FHA lenders at ease (See next story for background). In 2014, Wells dropped the minimum credit-score requirement to 600 for FHA borrowers after talks with the Department of Housing and Urban Development and policymakers. The FICO readjustment applies to Wells’ FHA retail purchase loans, aligning it with the 640 minimum credit score requirement for the bank’s correspondent business. In a previous statement, Wells reiterated the need for clearer rules in order to ...

September 18, 2015 - Inside FHA/VA Lending

Lenders, Trade Groups Urge FHA to Withdraw Claim-Filing Proposal

The financial services industry is calling on the FHA to either make drastic changes to proposed timelines for filing insurance claims or kill the entire proposal. Banks, nonbanks, credit unions and industry trade groups pushed back against the controversial proposal, warning it would do more harm than good to the FHA single-family program, lenders and consumers. Concerned with worsening late-claim filing, the FHA proposed to establish a timeframe for filing insurance claims and to penalize lenders with complete termination of insurance if they fail to meet the deadlines. In addition, the agency proposed to prohibit reimbursement of certain expenses if a mortgagee fails to complete certain actions within prescribed periods. Finally, the FHA proposed to establish a new method by which interest-rate curtailments and expense curtailments are pro-rated. Mortgage lenders have ...

September 18, 2015 - Inside FHA/VA Lending

Second Quarter Originations Fuel FHA Jumbo Securitization Surge

FHA jumbo securitization continued to rise over the first six months of 2015 on the back of soaring FHA jumbo production in the second quarter. FHA jumbo originations in the second quarter more than doubled to $6.8 billion, according to the Inside Mortgage Finance database. FHA data showed that the jumbo share of originations was highest in conventional-to-FHA refinance (14.9 percent) and streamlined FHA refis (13.3 percent,) but just 9.0 percent for purchase loans. Delivery of FHA jumbos, including modified loans, into Ginnie Mae jumbo mortgage-backed securities rose 131.9 percent in the second quarter from the prior quarter and was up 115.8 percent compared to the first six months of 2014. Wells Fargo led the market in the first half with $1.4 billion in jumbos contributed to MBS, up 123 percent quarter over quarter. That was good enough for a 12.7 percent market share. PennyMac Corp. accounted for ... [ chart ]

September 18, 2015 - Inside FHA/VA Lending

VA Jumbo Volume Up in 2Q15, Significant Gains Year-Over-Year

Ginnie Mae securitized $14.2 billion of VA jumbo loans in the first half of 2015, more than double the volume seen during the same period a year ago. VA securitization data for the first six months reflect an upward trend in VA loan originations, which lenders attribute to better outreach to veterans and servicemembers and aggressive marketing strategies. VA jumbo securitization in the first half of the year was up 120.7 percent from the same prior-year period. Volume also was up 13.9 percent in the second quarter from the previous quarter. All top-five VA jumbo securitizers reported large gains year over year, but four showed volume decreases quarter over quarter. Third-ranked PennyMac recorded a 3.4 percent gain in the second quarter from the prior quarter. The top five, in sequential order – Wells Fargo, Freedom Mortgage Corp., PennyMac Corp., U.S. Bank and Quicken Loans – accounted for ... [ chart ]

September 18, 2015 - Inside Nonconforming Markets

News Briefs

Radian started offering two new mortgage insurance products this week, both of which include jumbo loans. The “super jumbo” product allows for loan-to-value ratios as high as 95 percent with a loan limit up to $850,000. The program requires a credit score of at least 720 and allows debt-to-income ratios as high as 43 percent. Radian’s Medical Professional Program is aimed...

September 18, 2015 - Inside MBS & ABS

Mortgage Securitization Rate Still Down Slightly From 2014 as MBS Production Catches Up With Lending Boom

Mortgage securitization rates in 2015 are still low compared to last year, but some of the decline is likely due to the lag between primary market origination and MBS issuance. For the first six months of the year, new MBS issuance represented 73.8 percent of total originations, according to a new Inside MBS & ABS analysis. That’s down from a 75.4 percent securitization rate for all of 2014. Securitization rates are...[Includes one data table]

September 17, 2015 - Inside Mortgage Finance

Jumbo Mortgage Production Up Sharply in 2Q15, Both Inside and Outside Agency MBS Programs

Originations of jumbo mortgages rose sharply during the second quarter of 2015, including loans in high-cost housing markets that are eligible for agency mortgage-backed securities, according to a new Inside Mortgage Finance ranking and analysis. During the second quarter, the market produced a whopping $127.6 billion of home mortgages that exceeded the $417,000 benchmark conforming loan limit, a 33.1 percent increase from the first three months of the year. Jumbo mortgages accounted for 28.7 percent of second-quarter originations, the highest ratio since “emergency” high-cost limits were set back in 2008. Most of the jumbo production was...[Includes three data tables]

September 11, 2015 - Inside MBS & ABS

Concern Over Gain-on-Sale Margins Heats Up as Volumes Begin to Droop; Meanwhile SRPs Are Still Strong

With MBS issuance volume falling sharply in August, the mortgage industry may have another profit-related concern on its hands: gain-on-sale margins are coming under pressure. For now, no one is panicking, but until the recent rate drop – courtesy of China devaluing its currency – loan volumes were beginning to slow, especially for refinancings, although there’s plenty of hope that the purchase business will stay robust through the remainder of the fall. As one jumbo securitization official told Inside MBS & ABS: “Gain-on-sale margins have been...

September 11, 2015 - Inside MBS & ABS

Ginnie Mae Updates Guidance for Issuers Requesting Approval of Changes in Their Business Positions

Ginnie Mae this week revised its requirements for participating MBS issuers seeking approval of changes in their business status as a result of mergers, change of ownership or control, transfer of assets or a negative turn in their dealings with regulatory agencies. The agency decided to update the guidance because of the increasing number of requests from issuers, according to Ginnie Mae President Ted Tozer. The requests are getting more complex as well, he said. The agency’s Mortgage-Backed Securities Guide has been updated...

September 10, 2015 - Inside Mortgage Finance

Nonbanks Rebut Claims of Inadequate Regulation, Banks Claim Heavier Safety and Soundness Burden

There is no doubt that nonbank mortgage lenders are as heavily regulated as banks when it comes to consumer protection, some industry executives say, but the level of scrutiny for safety and soundness may be higher for depository institutions. The Community Home Lenders Association asserts that nonbanks are subject to more consumer protections than banks and have virtually identical regulatory burdens imposed by product regulations such as those for the FHA, VA, Ginnie Mae, Fannie Mae and Freddie Mac. “While nonbanks are heavily regulated at the state level, they are...

September 10, 2015 - Inside Mortgage Finance

Industry Groups Call for Withdrawal of FHA’s Proposed Claim-Filing Timelines, Warn of Long-Term Negative Effects

Industry trade groups are calling for the withdrawal of a proposed servicing rule that would set new deadlines for filing FHA insurance claims and penalize lenders with termination of insurance coverage if they failed to comply. Banks, independent mortgage lenders and credit unions warn that FHA’s proposed changes to its claims regulations could result in higher interest rates, credit restrictions and lenders exiting from the FHA program. Such effects could be magnified in the hardest hit housing markets, particularly in states that have long foreclosure timelines or older housing stock. The FHA proposal addresses...

September 10, 2015 - Inside Mortgage Finance

Mortgage Bankers Association Turns the Corner Financially; As for that Old Office Building Debt…

The Mortgage Bankers Association ended its last fiscal year in the black with $7.7 million in net assets, a marked improvement from the negative $3.8 million it had when the year began. However, according to a review of MBA’s past tax returns by Inside Mortgage Finance, the trade group has its work cut out if it wants to return to the halcyon days before the housing bust when it boasted $63.3 million in net assets, a cushion that was depleted thanks to the industry’s downturn and a disastrous investment in a new headquarters building back in 2010. MBA officials continue...

September 7, 2015 - Inside the CFPB

In Brief: Worth Noting II

FCC Order Conflicts With CFPB Mortgage Servicing Rules, Other Foreclosure Prevention Efforts, Industry Group Says. A recent order from the Federal Communications Commission clarifying certain provisions of the Telephone Consumer Protection Act clashes with the CFPB’s mortgage servicing rule and other federal regulations designed to help struggling homeowners hold onto their homes, a representative of national mortgage lenders, servicers and service providers wrote top government officials last week. The FCC’s order, released June 18, 2015, aims to bolster consumer protections against unwanted telephone calls and texts by, in part, restricting the ability of mortgage servicers, debt collectors and others to make autodialed or prerecorded phone calls without prior express consent of the person called. Violators face strict liability for noncompliance...

September 4, 2015 - Inside FHA/VA Lending

Around the Industry

Another Cut in FHA Premiums Coming This Winter? Will the FHA take the bold step of cutting annual mortgage insurance premiums this winter? It’s an intriguing question posed by Capital Alpha Partners. The research firm, in a new report, quotes what it calls a “reliable FHA bull” who “presciently foresaw” the last premium cut. Alpha cautions that its source on the matter is not betting on such a move, but raises the possibility “that the tumblers could fall into place once again.” One possible catalyst for an MIP cut would be poor results from a forthcoming Home Mortgage Disclosure Act report that shows FHA as well as Fannie Mae and Freddie Mac are not serving low-income borrowers very well. In January 2015, FHA implemented a half-percent reduction in annual mortgage insurance premiums. At the time, the Department of Housing and Urban Development predicted that 250,000 new homeowners would ...

September 4, 2015 - Inside FHA/VA Lending

FHA Crafting New Standards for Insuring Loans with PACE Liens

The FHA is developing standards that would allow FHA financing on homes with existing Property Assessed Clean Energy liens going forward. Specifically, the guidance would require subordination of PACE financing to first-lien FHA mortgages. The FHA is also working on a monitoring mechanism to track the number of PACE loans with FHA insurance in the future, said a HUD spokesman. Mortgage market analysts say FHA’s action could lead to broader adoption of the PACE program for FHA-insured single-family homes. The Mortgage Bankers Association, in a statement, applauded the move. “This modification should allow some homeowners to install energy improvements in their home but not impede the rights of the first lien, something the original PACE program failed to consider,” said David Stevens, MBA president and CEO. PACE programs allow local governments to raise bond-funded financing to ...

September 4, 2015 - Inside FHA/VA Lending

VA Issues Clarifying Guidance for Repurchase, Mobile-Home Loans

The VA Home Loan Guaranty Program has issued guidance to clarify the notification requirement applicable to all holders of VA repurchase and mobile-home mortgage loans. Under existing regulation, holders of VA repurchase and mobile-home loans are required to report to the Department of Veterans Affairs any event that leads to the full payment of a VA-backed loan. The guidance requires all holders to report the status of all VA repurchase and mobile-home mortgages upon full satisfaction of the loan. All notifications must be sent directly to the chief of contract assurance at nashpm.vbaco@va.gov. For further questions, contact Ronnie Lamb at ...

September 4, 2015 - Inside FHA/VA Lending

FHA Announces Interim Procedures After Finding HECM Tech Problems

The FHA has discovered glitches in FHA Connection and in the Home Equity Conversion Mortgage calculation software, which are creating problems for HECM lenders. A bad field edit in FHA Connection is preventing mortgagees from completing their on-screen financial assessment update on HECMs with negative residual income. This hinders submission of reverse-mortgage transactions to FHA for insurance. The FHA has issued temporary procedures that include instructions on submitting a request for a waiver of penalties for late payment of mortgage insurance premiums on closed loans. The agency was also alerted to a second technical problem following the release of the HECM Calculator, Version 2.2. The software incorrectly defaults, in some cases, to the 2.5 mortgage insurance premium rate when a value is entered in the Cash from Borrower and Cash from Lender fields. The FHA is also issuing ...

September 4, 2015 - Inside FHA/VA Lending

FHA Unveils Reporting Process for Post-Endorsement Loan Reviews

The FHA has announced a new format for reporting results of quarterly post-endorsement technical reviews of single-family loans. Previously, the loan-level findings were grouped into five broad categories: file documentation, credit/underwriting, operation deficiencies, program eligibility and collateral/asset valuation. The top five reasons for an “unacceptable” rating were provided for each category. Loans were rated as “conforming,” “deficient,” or “unacceptable,” with the last two ratings based on the magnitude of the underwriting error. With the new format, the focus will be on the most prevalent unacceptable findings, regardless of category. The period upon which the reporting is based is also different, according to FHA.Instead of reporting the review findings on a loan sample in the most recent quarter, FHA will now wait for one quarter to pass before reporting on the sample. Emphasizing the frequency of ...

September 4, 2015 - Inside FHA/VA Lending

Condo Projects Could Lose VA, FHA Business Due to Lapsed Approvals

Many condominium projects in California are losing FHA and VA business because their agency approvals have lapsed or are about to expire, according to lenders. In Orange County alone, about 57 percent of condo developments have FHA or VA approvals that are near expiration, said Jon Shrum, vice president of Commerce Home Mortgage in Huntington Beach, CA. It is unclear how many developments have expired approvals but the number could be significant, Shrum said. Condos accounted for 2.9 percent of total FHA endorsements as of June 30, 2015, and that share has remained flat over the first six months of 2015 and on a year-over-year basis, according to FHA data. “We’re seeing a lot of condo complexes whose approvals are expiring, and they are not even aware of it,” he said. “As an FHA and VA lender, we try to reach out to the condo homeowners associations (HOA) to make sure they retain or renew their ...

September 4, 2015 - Inside FHA/VA Lending

FHA’s Claim-Filing Proposal Could Adversely Affect Lending, Servicing

An FHA proposal to establish a deadline for filing insurance claims and revise existing policies that allow punitive penalties for missing FHA foreclosure deadlines could have a chilling effect on FHA lending and servicing, analysts warned. Housing policy analysts and industry attorneys say the two-part proposal issued on July 6 raises red flags for both borrowers and servicers and could potentially cause lenders to leave the FHA single-family mortgage insurance program. The Urban Institute describes the proposed rule as “a mixed bag, but on balance far more negative than positive.” “It represents a modest improvement to very harsh rules for missing established deadlines but imposes an unrealistic timeline for filing FHA insurance claims and an overly punitive penalty for missing that timeline,” the group said. Attorneys at K&L Gates in Washington, DC, are more ominous in their assessment of the ...

September 4, 2015 - Inside FHA/VA Lending

Increased Purchase, Refi Activity Boost Ginnie First Half Issuance

Securitized FHA,VA and rural housing loans in Ginnie Mae mortgage-backed securities totaled $188.5 billion in the first six months of 2015, fueled by significant purchase and refinance activity, according to an Inside FHA/VA Lending analysis of Ginnie Mae data. An estimated $113.4 billion in FHA-insured mortgages were securitized during the first half of the year. Of that total, $60.6 billion were purchase mortgages and $44.2 billion were refinance loans. FHA purchase-loan production increased 58.8 percent in the second quarter from the prior quarter while refi lending jumped 160.8 percent over the same period as FHA’s reduced annual mortgage insurance premium began to take hold. The FHA loans that went into Ginnie MBS showed an average loan-to-value ratio of 92.8 percent and an average debt-to-income ratio of 39.7 percent. Borrowers’ average FICO score was 675.9, which was indicative of ... [ 2 charts ]

September 4, 2015 - Inside FHA/VA Lending

Stakeholders Say FHA’s Revised Loan Cert Proposal Lacks Clarity

Wells Fargo this week said it would reinstate certain credit overlays on its FHA business segment after expressing frustration over FHA’s republished proposal on loan-level certification. The lender, which ranked second on Inside FHA/VA Lending’s top FHA lenders for the first six months of 2015, reiterated the need for clearer rules in order to originate FHA-insured loans without fear of litigation or enforcement action. The bank said it is very disappointed with FHA’s revised certification proposal, which was republished in the Sept. 1 Federal Register. “In spite of much input to FHA from various consumer groups and lenders over a long period of time, [the] proposal falls short of what is needed,” said Mike Heid, head of Wells Fargo Home Lending. “As a result, this will now force us to add back certain credit overlays on the FHA single-family program.” Other FHA lenders could follow Wells Fargo’s lead as some did when ...

September 3, 2015 - Inside Mortgage Finance

Despite Changes, FHA’s Proposed Loan Certification Policy Creates More Uncertainty, Potential Liability, Lenders Say

The Department of Housing and Urban Development this week republished for comment new proposed changes to lender certification for FHA that would allow for minor lender errors while leaving the door open for government enforcement action under the False Claims Act. The proposed revisions, however, failed to impress mortgage lenders and raised the specter of increased overlays unless HUD makes clear assurances that, barring any significant mistakes, lenders will not be on the hook for millions of dollars for small glitches in the loan certification document. “The language in the certification lacks...

September 3, 2015 - Inside Mortgage Finance

Purchase-Mortgage Lending Likely Hit Post-Crisis High In 2Q15, But Refinances Continued to Show Strength

Purchase-mortgage lending provided most of the oomph that drove the 23.6 percent increase in total mortgage originations during the second quarter, but refinance activity still accounted for slightly over half of total production. Lenders funded $222 billion of first-lien purchase mortgages during the second quarter, a 59.7 percent increase from the first three months of 2015, according to Inside Mortgage Finance estimates. That was just shy of the $223 billion of purchase mortgages originated back in the third quarter of 2013, a figure that included some second-mortgage production associated with purchase loans. Meanwhile, refinance lending rose...[Includes three data tables]

August 28, 2015 - Inside The GSEs

GSEs Losing Race for First-Time Homebuyers to FHA/VA Financing

First-time homebuyers make up a significant part of the purchase-mortgage market, but Fannie Mae and Freddie Mac have a hard time competing with Ginnie Mae, according to a new Inside The GSEs analysis of loan-level data.The three agencies securitized $118.90 billion of first-time buyer mortgages during the first six months of 2015, but Ginnie accounted for over half (52.4 percent) of the business. Ginnie’s big advantage is that it gets all the FHA and VA loans, while the GSEs so far have not gotten much traction in their reduced-downpayment programs. First-time buyers typically have less savings for a downpayment and often have less-stellar credit profiles. In the first half of this year, the average loan-to-value ratio for...(charts)

August 28, 2015 - Inside Mortgage Trends

Is FHA’s New Metric the Standard of the Future?

The FHA late this month announced a new tool to supplement Neighborhood Watch’s compare ratio to give lenders a better sense of their performance and, at the same time, ease concerns about lending to higher-risk borrowers. FHA lenders welcomed the long-anticipated performance metric although concerns linger about lender liability. Nonetheless, for The Collingwood Group, a Washington, DC-based advisory firm, the question is whether the tool represents a ...


Which mortgage issue, in particular, keeps your management team up at night? (Check one only.)

TRID (Integrated Disclosures)
Uncertainty regarding "marketing service agreements"
Getting sued by HUD/DOJ for alleged underwriting violations
Declining loan volumes

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