FHA, VA

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

February 17, 2017 - Inside FHA/VA Lending

VA Peppers Lenders with New Policy Guidance, Instructions

The Department of Veterans Affairs has issued guidance regarding various aspects of the VA Home Loan program. On Valentine’s Day, the VA sent out a reminder to VA lenders regarding the continued use of the current National Pest Management Association (NPMA) Department of Housing and Urban Development Forms NPMA-99-A and NPMA-99-B. Circular 26-17-07 has instructions for filling out both forms. HUD NPMA-99-A, Subterranean Termite Protection Builder’s Guaranty, is completed and certified by the builder. The licensed pest control company completes the HUD-NPMA-99-B. Also on the same day, the VA announced a new requirement for staff appraisal reviewers (SARs). In 2015, VA released guidance, that established a low-risk and a high-risk appraisal review process. This requires SARs to review the LoanSafe Appraisal Manager product during the issuance of the ...


February 17, 2017 - Inside FHA/VA Lending

Lender, Charity Hid Defaults from FHA to Manipulate Default Rate

Three federal agencies have announced a joint settlement agreement and consent order with a New York FHA lender and several of its top executives to resolve alleged violations of the Financial Institutions Reform, Recovery and Enforcement Act and the False Claims Act. The U.S. Attorney for the Eastern District of New York, the Office of the Inspector General for the Department of Housing and Urban Development, and the Inspector General of the Federal Deposit Insurance Corp. announced the $1.25 million settlement with Franklin First Financial, Ltd., its Chief Executive Officer Frederick Assini, Chief Operating Officer Christopher Berman, and Andrew Dauro, a manager of the company. The lawsuit alleged that the defendants made illegal payments on behalf of borrowers from February 2009 through March 2010 to keep default rates low so that Franklin First could keep its ...


February 17, 2017 - Inside FHA/VA Lending

FHA-Related FCA Enforcement, Recoveries Increase in 2016

Claims relating to housing and mortgage fraud represented a huge chunk of the amount recovered by the federal government under the False Claims Act last year. An analysis by the WilmerHale law firm found that the Department of Justice continued to give high priority to FCA investigations and prosecutions in 2016, resulting in more than $4.76 billion in settlements and judgments, nearly $1 billion more than in 2015. The increase also reflected a continued focus on financial institutions and the mortgage lending industry, with approximately $1.6 billion in recoveries last year, the law firm said. The DOJ, working on referrals from the Department of Housing and Urban Development’s inspector general, has used the FCA effectively as a tool in prosecuting FHA-related fraud cases against lenders. The DOJ ...


February 17, 2017 - Inside FHA/VA Lending

4Q16 Spike in FHA Delinquencies Justifies Trump’s Premium Action

The spike in FHA delinquencies in the fourth quarter of 2016 justifies the Trump administration’s decision last month to suspend and review the outgoing administration’s lowering of FHA mortgage insurance premiums, said House Financial Services Committee Chairman Jeb Hensarling, R-TX. Commenting on the Mortgage Bankers Association’s quarterly delinquency rate survey, Hensarling praised President Trump’s decision to set aside the 25-basis-point premium reduction, which Inside FHA/VA Lending reported first on Jan. 6, 2017. “Lowering premiums at this time was a big mistake,” said Hensarling. “The sudden increase in delinquencies makes it clear that President Trump was absolutely right to undo the previous administration’s irresponsible action.” Hensarling recalled that in 2013 “taxpayers had to spend $1.7 billion to bail out the FHA.” Going forward, the FHA must be fiscally sound, with a ...


February 17, 2017 - Inside FHA/VA Lending

Republicans Invoke Cloture in Upcoming Carson Confirmation

Ben Carson is a step closer to being confirmed as secretary of the Department of Housing and Urban Development after Republicans this week invoked cloture to block any attempt by Democrats to delay or prevent a Senate confirmation vote. Republicans filed their cloture motion and waived quorum call on Feb. 13, effectively ending further debate on Carson’s nomination. At least 16 senators must sign a cloture petition.]There has been no date set for Carson’s confirmation vote. The Trump administration has been slow to fill its Cabinet positions, partly due to Democrats’ stalling techniques. So far, only nine cabinet positions have been filled. There has been no Senate action scheduled since the Senate Banking Committee approved Carson confirmation by voice vote on Jan. 24, and nobody seems to have an explanation for the delay. While the committee vote was unanimous, Democrats continue to ...


February 17, 2017 - Inside FHA/VA Lending

Debt Burdens Crept Slightly Higher In 2016 for FHA and VA Borrowers

FHA and VA borrowers took on slightly greater payment obligations in 2016 than they have in previous years, according to a new analysis and servicer ranking by Inside FHA/VA Lending. The average debt-to-income ratio for FHA loans securitized in Ginnie Mae mortgage-backed securities last year was 40.4 percent, up about half a percentage point from 2015. The average VA DTI ratio nudged up slightly to 38.3 percent. Average credit scores in the FHA program drifted slightly lower, while climbing 1.9 points for VA loans. The differences in credit quality between the two programs remained substantial: the VA attracts borrowers with higher credit scores and lower DTI ratios who take on larger loans. Some 36.3 percent of VA loans backing Ginnie MBS issued last year had credit scores of 740 and up, while just 13.2 percent of FHA loans fell in that category. Meanwhile, 67.1 percent of FHA loans had ...


February 16, 2017 - Inside Mortgage Finance

UI Report says Credit Access Tight, Harder to Obtain Mortgage Loan Today than Pre-Crisis

Despite some reports of credit access loosening, it’s harder to get a mortgage today than it was during the housing bubble, according to the Urban Institute. With borrowers being denied at a much higher rate than in the past, lower-credit mortgage applicants are dropping out of the housing market. As access to credit tightened after the financial crisis, many lower-credit applicants were discouraged from applying, the UI study noted. That led to a higher-credit applicant pool, which in turn led to a lower rejection rate. This caused...


February 16, 2017 - Inside Mortgage Finance

Delinquencies Increase on a Quarterly Basis At the End of 2016, Foreclosures Decline

Mortgage delinquencies in the fourth quarter of 2016 hit their highest level of the year, erasing declines from the previous quarter, according to the Inside Mortgage Finance Large Servicer Delinquency Index. The foreclosure rate continued to decline, hitting levels last seen in 2007. Among the servicers tracked by the index, the total mortgage delinquency rate was 5.05 percent as of the end of the fourth quarter. The rate was at 5.54 percent at the end of 2015 and declined each quarter until the most recent period. Each delinquency bucket increased...[Includes one data table]


February 16, 2017 - Inside Mortgage Finance

The Time is Right for a Boom in Servicing Sales. Another Month or Two of Slow Prepayments Could Spur Market

The secondary market for bulk agency mortgage servicing rights is beginning to pick up a decent head of steam, but one factor is holding it back from a full-throttle: worries about prepayment speeds. “We’ve had one month of low prepayment numbers,” said Mark Garland, president of MountainView Servicing Group, Denver. “A couple of more months would be better.” According to investment bankers who work the market, although rates have been on a steady climb since the November election – the yield on the benchmark 10-year Treasury is...


February 16, 2017 - Inside Mortgage Finance

Private MIs Expanded Market Share in 2016 Despite Fourth-Quarter Surge by VA Guaranty Program

Private mortgage insurers grew their share of the primary mortgage insurance market during 2016 even though they lost some ground during the second half of the year, according to a new Inside Mortgage Finance ranking and analysis. Private MIs wrote an estimated $270.30 billion of new mortgage insurance last year, a robust 23.1 percent increase from 2015. The main engine was a 24.2 percent increase in traditional, or flow, MI business, coupled with a jump in bulk primary coverage – though such activity totaled just $860.0 million in 2016. Private MIs covered...[Includes three data tables]


February 10, 2017 - Inside MBS & ABS

Mortgage Securitization Rate Slumped in 2016, But Market Was Catching Up as the Year Came to a Close

Only 69.1 percent of home mortgages originated in 2016 wound up in agency or non-agency MBS issued last year, according to a new Inside MBS & ABS analysis. It was the second-lowest annual mortgage-securitization rate on record, and the third year in a row that the rate failed to reach the 70.0 percent mark. The low securitization rate mostly results from the fact that relatively few jumbo mortgages get out of bank portfolios and into the non-agency MBS market. According to Inside Mortgage Finance estimates, some $381.0 billion of jumbo mortgages were originated...[Includes one data table]


February 9, 2017 - Inside Mortgage Finance

Carson Seeks ‘Strong Housing Finance Practitioner’ For FHA Post, Promises More Clarity for Lenders

Ben Carson, who is expected to be confirmed soon as the next secretary of the Department of Housing and Urban Development, said he’s looking for an experienced mortgage professional to guide the FHA program during his tenure. In recent years, the top FHA job has been held by people with more experience in government than in the mortgage business. The last industry veteran in the post was Dave Stevens, who brought years of mortgage finance experience when he took the job in the first Obama administration. He left in 2011 to become president and CEO of the Mortgage Bankers Association. In response to written questions from Senate Democrats, Carson said...


February 9, 2017 - Inside Mortgage Finance

HUD IG Says FHA Improperly Cleared New Defect Taxonomy and Pushes for Recall, HUD Holds Ground

The Department of Housing and Urban Development is facing criticism for its handling of FHA’s loan quality assessment methodology. A draft of the so-called defect taxonomy was published without proper departmental clearance, according to a recent report by HUD’s Office of Inspector General. The defect taxonomy is one of 13 FHA-related documents the OIG claims were not properly cleared. The OIG called on HUD to pursue departmental clearance for the documents and policies and to recall any documents that can’t be appropriately cleared. A recall of the defect taxonomy would be...


February 9, 2017 - Inside Mortgage Finance

Record Pace for Government Market Lost Steam in Late 2016 As Purchase-Mortgage Lending Swooned

Conventional mortgage originations held steady during the fourth quarter of 2016, but the government-insured market saw a noticeable downturn, according to a new Inside Mortgage Finance ranking and analysis. Production of conventional mortgages that fit under the purchase limits for Fannie Mae and Freddie Mac actually edged up 1.3 percent from the third quarter, hitting an estimated $322.0 billion. That was the sector’s strongest three-month origination volume since the second quarter of 2013, when lenders pumped out $363.0 billion of conventional-conforming loans. Jumbo mortgage originations were...[Includes two data tables]


February 3, 2017 - Inside FHA/VA Lending

Around the Industry

Final Civil Action: Primary Residential Mortgage. The Department of Housing and Urban Development’s Office of the Inspector General has recommended that the department’s Office of Legal Counsel acknowledged $3.13 million of a $5 million settlement agreed to by Primary Residential Mortgage is due HUD. Primary agreed last September to a $5 million settlement with the Department of Justice to resolve allegations of failing to comply with FHA requirements in connection with its origination, underwriting and endorsement of 100 FHA-insured loans. Primary’s settlement is neither an admission of guilt nor assumption of any liability that may arise from the flawed transactions, the IG said. As of Oct. 4, 2016, the settlement amount due HUD had been paid in full. Moody’s Downgrades $243 Million of FHA/VA Residential MBS. Moody’s Investors Service has downgraded the ...


February 3, 2017 - Inside FHA/VA Lending

Vet Agency Clarifies Student Loan Policy in Underwriting VA Loans

The Department of Veterans Administration has issued guidance to clarify its new policy regarding student loans in underwriting VA guaranteed home loans. Specifically, the guidance shows lenders how to calculate a student-loan monthly payment when figuring out a VA borrower’s ability to repay. The clarification in the guidance applies to deferred student loans and the new policy will provide guidance for student loans currently in repayment or about to begin repayment within 12 months of a VA loan closing. How should a lender calculate a student loan monthly payment for loan underwriting purposes? A monthly payment need not be considered if the borrower provides written proof that the student loan will be deferred at least 12 months beyond the closing date, the guidance said. If a student loan is under a repayment plan or is about to begin repayment, the lender must consider the anticipated monthly payment in the ...


February 3, 2017 - Inside FHA/VA Lending

Suspending Premium Reduction Appears to be Better for HUD

Setting aside the 25-basis-point FHA premium reduction is a good idea because it would not have done much to expand access to credit anyway, according to researchers at the Urban Institute. In a recent analysis, Laurie Goodman, co-director of UI’s Housing Finance Policy Center, and research associate Bing Bai took a closer look at the FHA pricing adjustment and found that the impact on the market would have been small.The researchers concluded that retaining the current pricing for FHA-insured mortgages would help strengthen the FHA’s financial situation and allow the Mutual Mortgage Insurance Fund to build its buffer. As one of his final official acts as secretary of the Department of Housing and Urban Development, Julian Castro announced a 25-basis-point MIP reduction for most FHA single-family mortgages. The fee change was to take effect on Jan. 27, 2017. Just hours after ...


February 3, 2017 - Inside FHA/VA Lending

HUD Issues Guidance on Servicing Loans on Homes with PACE Liens

The Department of Housing and Urban Development has issued guidance for servicing FHA-insured mortgages on properties encumbered with a Property Assessed Clean Energy (PACE) obligation. The PACE guidance establishes servicing policies and procedures that went into effect on Jan. 19, 2017. It applies to all FHA Title II forward mortgages. A PACE loan is a way to finance clean-energy improvements in residential and commercial properties to reduce energy bills and facilitate water and energy conservation. The terms and conditions of a PACE loan may vary among state, local government and programs. Generally, a PACE loan is secured and collected in the same manner as a special tax assessment on the owner’s property. Payments are not made directly to the ...


February 3, 2017 - Inside FHA/VA Lending

MBA Concerned About Lack of Consumer Protections in PACE

The Mortgage Bankers Association has asked the Trump administration to help close a loophole in the Property Assessed Clean Energy (PACE) program that could put consumers at risk. In a recent public service video, Pete Mills, MBA senior vice president for residential policy and member engagement, said the MBA has been in contact with the president’s transition team to see if there is a way to incorporate consumer protections into the program. Mills noted a “significant void in consumer protection” due to the structure of PACE programs. The PACE program allows local or state governments, when authorized by state law, to finance the upfront cost of energy upgrades on commercial, residential or industrial properties. A PACE loan is repaid over a set period – typically 10 to 20 years – through a special assessment on the property on top of the owner’s annual property tax bills. It has seniority over all ...


February 3, 2017 - Inside FHA/VA Lending

Carson Wants a ‘Housing Finance Specialist’ as FHA Commissioner

Housing and Urban Secretary-Designate Ben Carson said he would want an expert in housing finance to lead the FHA and help draw disillusioned lenders back into the FHA single-family mortgage program. In a written response to questions from Sen. Sherrod Brown, D-OH, ranking minority member of the Senate Committee on Banking, Housing and Urban Affairs, Carson provided no detail on how he would entice previous lenders to return to the FHA. Carson made clear, however, that if confirmed he would seek a “strong housing finance practitioner who believes in the mission of the FHA” for the job of FHA commissioner. “We will work hard to balance mission and risk to preserve and sustain FHA now and into the future,” he wrote. “We will also use existing authorities to increase the certainty of loan eligibility in an effort to attract back many of the lenders who are no longer ...


February 3, 2017 - Inside FHA/VA Lending

IG Calls for New Clearances for 13 Policy Changes Over Last 2 Years

The Department of Housing and Urban Development’s inspector general has recommended a recall of several major policy changes HUD has made over the last two years for review and clearance, including the agency’s defect taxonomy. The HUD IG said an audit found that the department had failed to review, approve and document FHA program directives as required when implementing changes to its programs, policies and operations from July 2014 through December 2015. The findings come just as President Trump ordered a freeze on new rules, policies, directives and notices pending a review by the incoming administration. Specifically, HUD distributed at least 15 documents and implemented significant policy changes without first completing departmental clearance, the IG said. At least three draft documents were posted for public comment without obtaining full departmental clearance, the ...


February 3, 2017 - Inside FHA/VA Lending

FHA Endorsements Decline in 4Q16 VA Refinances Increase Slightly

FHA single-family endorsements declined 5.5 percent from the third to the fourth quarter of 2016, losing some market share, while VA saw a modest uptick in guaranteed loans, thanks to robust refinancing activity. The FHA endorsed a total of $68.3 billion of forward mortgages during the fourth quarter, according to an Inside FHA/VA Lending analysis and ranking. That brought total production over a 12-month period to $255.6 billion (excluding Home Equity Conversion Mortgage loans), a 7.3 percent increase over 2015. FHA activity in the purchase market fell 13.6 percent in the fourth quarter though annual volume was up 14.3 percent from 2015. While FHA historically has been stronger in the purchase market, 2016 proved to be a more competitive year for FHA streamlined refinancing. FHA-to-FHA refinance endorsements rose 15.6 percent in the fourth quarter from the prior quarter, but ... [ 5 charts ]


January 26, 2017 - Inside Mortgage Finance

Stakeholders Warn Suspension of FHA Price Cut May Disrupt the Market; MBA Issues ‘Coping’ Guidance

Industry groups are calling for better ways to minimize the market disruption that may come in the wake of the Trump administration’s decision to suspend the recent 25-basis-point reduction of the FHA mortgage insurance premium. The suspension of the fee cut was announced Jan. 20 by Genger Charles, general deputy assistant secretary for housing at the Department of Housing and Urban Development, pending a review by the incoming administration. The pricing change was scheduled to take effect for loans with a closing or disbursement date of Jan. 27 or later. The moratorium has...


January 26, 2017 - Inside Mortgage Finance

Mortgage Originations Held Steady in 4Q16, Pushing 2016 to Strongest Year Since 2012

Mortgage originations defied expectations in the fourth quarter and held virtually even with the previous period, despite a measurable increase in mortgage interest rates. According to exclusive new Inside Mortgage Finance estimates, some $580.0 billion of first-lien mortgages were originated during the fourth quarter of 2016, a slight 0.9 percent drop from the third quarter. That lifted total production for the year to an estimated $2.065 trillion, up 19.0 percent from the 2015 total. Industry forecasters were...[Includes two data tables]


January 20, 2017 - Inside FHA/VA Lending

E-Submission Required for VA Prior-Approval Loan Documents

Effective Feb. 13, 2017, VA lenders will be required to submit prior-approval mortgage loans electronically through the WebLGY system to improve the prior-approval process. Currently, lenders mail their prior-loan approval packages to the regional loan center that has jurisdiction over loan underwriting – a tedious, time-consuming process. Electronic submission will help speed things up, the VA indicated. Lenders must follow the guidelines for prior approval and stacking order in the VA’s Lender Handbook. In addition, lenders must furnish a cover letter with the uploaded package stating the reasons for the prior approval and explaining any unique circumstances. The cover letter also must include the submitting underwriter’s name, phone number and email address as well as contact information for the underwriter’s manager. The lender must ensure that the file contains the correct and complete ...


January 20, 2017 - Inside FHA/VA Lending

Ex-FHA Chief Suggests Common Standards for FHA, VA, USDA, GSEs

A former FHA commissioner is calling for a common national housing policy and regulations, as well as aligned capital standards for FHA and the government-sponsored enterprises in lieu of the current regulatory regime – an idea first put forth by the Mortgage Bankers Association. Brian Montgomery, former assistant secretary for housing and FHA commissioner in the second Bush administration, said the nation’s homebuyers are at a disadvantage due to the lack of a unified, detailed plan for the housing finance system. Montgomery, a current contender for a top executive position at the Department of Housing and Urban Development, urged President Trump to create a new Office of National Housing Policy to develop a “unified and collaborative approach to our nation’s housing policy, including homeownership and subsidized rental housing.” “The prevailing view within the ...


January 20, 2017 - Inside FHA/VA Lending

HFAs to Benefit from FHA Premium Cut, Wage Growth Says Moody’s

The 25-basis-point decrease in the FHA’s annual insurance premiums translates not only to annual savings for homeowners but also boosts the competitiveness of housing finance agency loan products, according to a new report from Moody’s Investors Service. The report regards the latest FHA pricing adjustment as credit positive for housing finance agencies (HFAs) because it would make FHA loans more affordable to borrowers and increase HFA loan originations. The announcement to reduce the annual mortgage insurance premium to its lowest allowable level took stakeholders by surprise. In November, FHA had no plans to lower premiums despite an uplifting actuarial report on the condition of the Mutual Mortgage Insurance Fund. This week, however, there is uncertainty as to whether the Trump administration will allow the reduced premiums to take effect for new loans closing on or after ...


January 20, 2017 - Inside FHA/VA Lending

FHA Codifies Key Changes to HECM Rules, Issues New Program Policies

The Department of Housing and Urban Development has codified significant changes to the Home Equity Conversion Mortgage program that have reduced risks to both FHA and reverse mortgage borrowers. Specifically, the rule codifies existing HECM policies implemented by mortgagee letters, implements statutory changes, issues new origination and servicing policies, and clarifies existing regulatory language. HUD said it has established an eight-month lead time between the publication of the final rule and the effective date, Sept. 19, 2017, to provide lenders enough time to understand the rule and plan for necessary changes. The grace period also allows time for FHA to issue guidance and make system changes. The National Reverse Mortgage Lenders Association expressed support for the final rule. “Personally, I am glad to see this final rule get out the door,” said NRMLA President and ...


January 20, 2017 - Inside FHA/VA Lending

Lenders Expect VA Refis to Drop in 2017, Rising Demand for Purchase

VA originations have been trending upward over several quarters, thanks to an unusually heavy share of refinance business, but all good things, at some point, must slow down, lenders say. The refinance business overall has fallen to 45 percent from 55 percent in the fourth quarter of 2016, and that will have an effect on VA originations in the first quarter of 2017, said Andy May, chief operating officer of the American Armed Forces Mutual Aid Association Mortgage Division. Going forward, May expects VA originations to fall by 10 percent in the first quarter due to rising interest rates. But even though rates have been trending up, May saw an uptick in VA loan applications in January as fence-sitters jumped into the market to take out a loan before rates went any higher. “The MBA estimates rates will rise above 5 percent in the next 24 months and then down to 4.8 percent by the end of 2018, and up to 5.3 percent at the ...


January 20, 2017 - Inside FHA/VA Lending

Trump Administration Scuttles 25 bps Annual Premium Reduction

The Trump administration has officially set aside the 25 basis point cut in FHA annual premiums in a new mortgagee letter issued by the Department of Housing and Urban Development hours after Donald Trump was sworn in as the 45th president of the United States. Mortgagee Letter 2017-07 said that the annual-premium reduction HUD announced on Jan. 9 “has been suspended indefinitely.” Stakeholders will be notified in the event of a policy change, the letter added. The letter confirms reports earlier in the week that the FHA pricing adjustment was about to be spiked. Ben Carson, who had his confirmation hearing before the Senate Banking Committee last week, told lawmakers that he planned to work with the FHA director and financial experts to review the cut. However, the HUD secretary-designate gave no indication as to whether he favored a premium reduction that would benefit thousands of ...


January 20, 2017 - Inside FHA/VA Lending

FHA/VA Default Rates Spike Up In 4Q16, Nonbanks Still Growing

Mortgage default rates appeared to spike higher in the fourth quarter of 2016, according to a new analysis and servicer ranking by Inside FHA/VA Lending. Some 5.51 percent of FHA loans in Ginnie Mae mortgage-backed securities pools were reported as 30- to 60-days past due at the end of December. That was up 80 basis points from the previous quarter and was easily the highest default rate in the past three years. FHA default rates were also up in more serious delinquency categories: loans 60- to 90-days past due and those over 90-days late. The figures are based on loan count and are not seasonally adjusted. Similar trends occurred in the VA home loan guaranty program. The 30-60 category was up 41 bps, while 90+ delinquencies jumped 19 bps. The supply of Ginnie single-family MBS outstanding continued to set new records. The total, not including multifamily and FHA home-equity conversion ... [4 charts]


January 20, 2017 - Inside MBS & ABS

Good News/Bad News on MBS Trading Volume: With MBS Prices Falling, No Place to Sell?

The average daily trading volume in agency MBS fell to $192.1 billion in December, the lowest reading of the year, according to the Securities Industry and Financial Markets Association. For the full year, however, average daily trading volume in agency product came to $206.6 billion, compared to $193.0 billion in 2015 and $178.0 billion in 2014. The last time trading volume was higher than in 2016 came three years earlier when $222.8 billion in agency product was traded on a daily basis. What the numbers actually mean is...


January 19, 2017 - Inside Mortgage Finance

First-Time Homebuyers in the Market Contributing to Growing Number of Terminated Closings, says Trulia

The number of “sold” homes failing to seal the deal come closing time is growing. A new report from Trulia shows that the “sales fail” rate has jumped from 2.1 percent in 2015 to 3.9 percent in 2016. Trulia noted that there was an even bigger jump in incomplete sales in the past two years. Of all listed properties in the fourth quarter of 2014, only 1.4 percent did not reach the closing table. But in the fourth quarter of 2016, the number of failed sales catapulted to 4.3 percent. The reasons those sales are falling through the cracks range...


January 19, 2017 - Inside Mortgage Finance

Trump Administration Expected to Freeze Cut in FHA Mortgage Insurance Premiums

The Trump administration is expected to put a temporary freeze on the 25 basis point cut in FHA annual premiums that is scheduled to take effect Jan. 27. One industry source noted: “On Jan. 20, President Trump will be issuing an executive order that freezes all past actions over a certain period of time. The FHA premium reduction gets swept into this.” Sources told...


January 13, 2017 - Inside Mortgage Trends

VA Continues Gaining Market Share

Mortgages guaranteed by the Department of Veterans Affairs accounted for 29.4 percent of insured home loans securitized in the agency mortgage-backed securities market in the fourth quarter of 2016, a new Inside Mortgage Trends analysis reveals. That was up from a 27.2 percent share for the VA during the third quarter. The home-loan guaranty program has become a refinance dynamo, accounting for a whopping 44.6 percent of insured refi loans ... [Includes one data chart]


January 13, 2017 - Inside MBS & ABS

FHA’s New Pricing Adjustment Could Boost Ginnie Mae Issuance, Trigger Prepayments on Premium MBS

The 25 basis-point mortgage insurance premium cut announced this week by the Department of Housing and Urban Development’s departing leadership could switch $50 billion of issuance from Fannie Mae/Freddie Mac business to FHA as well as cause premium Ginnie Mae MBS to prepay faster, according to market analysts. Absent any adversarial pricing by private mortgage insurers, a guaranty fee adjustment by the Federal Housing Finance Agency or a reversal by the Trump administration, analysts with Bank of America Merrill Lynch see up to 12 percent of purchase and 2 percent of refis shifting to FHA. On June 9, HUD Secretary Julian Castro announced...


January 12, 2017 - Inside Mortgage Finance

HUD Cuts FHA Mortgage Insurance Premium by 25 bps, Hensarling Slams ‘Parting Gift,’ but Reversal Is Uncertain

Any pushback against the FHA’s 25 basis-point cut in the annual mortgage insurance premium remains to be seen despite grumblings from Capitol Hill, said stakeholders and industry analysts. Earlier this week, the outgoing leadership of the Department of Housing and Urban Development surprised the industry by reducing the annual MIP for 30-year FHA mortgages by 25 bps, and eliminated the higher MIP for loans exceeding $625,500. There are...[Includes one data table]


January 12, 2017 - Inside Mortgage Finance

Securitization of Private MI Loans Declined In 4Q16 Despite Jump in Insured Refi Loans

Lenders delivered $68.26 billion of single-family loans with private mortgage insurance coverage, including modified loans, into Fannie Mae and Freddie Mac mortgage-backed securities during the fourth quarter of 2016, according to a new Inside Mortgage Finance analysis and ranking. Fourth-quarter private MI activity for the two government-sponsored enterprises was down 10.1 percent from the previous quarter. Overall, Fannie/Freddie single-family MBS production was up 5.7 percent in the fourth quarter. The drop in MI-insured business at the two GSEs tracked...[Includes two data tables]


January 6, 2017 - Inside FHA/VA Lending

Around the Industry

VA Extends Making Home Affordable Program. The Department of Veterans Affairs has extended the Making Home Affordable program to Oct. 1, 2017. The program was set to expire on Jan. 1, 2017. USDA Approves NewFed Mortgage to originate Section 52 Guaranteed Rural Housing Loans. The U.S. Department of Agriculture has approved NewFed Mortgage Corp., a multi-state residential mortgage lender, to originate USDA loans. Based in Danvers, MA, retailer NewFed offers FHA, VA, USDA, conventional and jumbo mortgage products. Reviews Genworth Financial’s Proposed Sale to Chinese Conglomerate. Fannie Mae has approved Arch Capital’s acquisition of ...


January 6, 2017 - Inside FHA/VA Lending

Michigan Lender Agrees to Pay $48 Million to Resolve FCA Claims

United Shore Financial Services of Troy, MI, has agreed to pay $48 million to resolve allegations of FHA-related fraud, adding to the more than $7 billion in settlements and judgments the Department of Justice has collected since 2009. United Shore, parent company of United Wholesale Mortgage and Shore Mortgage, was accused of improperly originating mortgages and falsely certifying compliance with FHA requirements. Originated between Jan. 1, 2006, and Dec. 31, 2011, the loans eventually turned bad, resulting in significant losses to the FHA insurance fund. The complaint did not specify the number and total amount of the bad loans United Shore originated or the size of FHA’s losses on those loans. United Shore was charged with violation of the False Claims Act, becoming the latest financial institution to join a growing list of FHA lenders that have opted to settle, rather than litigate, ...


January 6, 2017 - Inside FHA/VA Lending

Rumored Nominees for HUD, FHA Jobs Dwindle, VA Sees Longer List

With industry and lawmakers focused on the confirmation hearing next week of President-elect Donald Trump’s nominee to head the Department of Housing and Urban Development, speculation as to who might become Dr. Ben Carson’s top deputy and FHA commissioner has apparently eased. After weeks of speculation, the list for HUD deputy secretary is down to three rumored contenders: Brian Montgomery, former assistant secretary and FHA commissioner; Pam Patenaude, president of the J. Ronald Terwilliger Foundation for Housing America’s Families; and Rick Lazio, a former congressman from New York and a housing finance attorney. Like Montgomery, Patenaude has experience at HUD, serving as assistant deputy secretary for field policy and management. She has extensive experience in housing as an executive vice president at Urban Land Institute and director of housing policy with the ...


January 6, 2017 - Inside FHA/VA Lending

Carson’s Inexperience Front and Center in Confirmation Hearing

The lack of experience in housing and mortgage financing matters could become a sticking point with Dr. Ben Carson, President-elect Donald Trump’s nominee for Housing and Urban Development secretary, during his Senate confirmation hearing on Jan. 12, according to stakeholders. “Democrats, in particular, will want to know his credentials and positions on various housing and enforcement issues,” said an industry observer. “There is doubt whether Carson can address such questions positively and specifically. ‘Living for a while in public housing’ is not a qualification to run HUD or oversee FHA for that matter.” However, Trump’s selection of Carson and other conservatives for cabinet positions signals his intent to govern from the right – a complete reversal from the eight years under President Obama. Notwithstanding his lack of housing expertise, Carson is on the path to promote and ...


January 6, 2017 - Inside FHA/VA Lending

Share of FHA Loans with Initially Material Defects Rises in 3Q16

The initial material defect rate for FHA-insured loans targeted for a quarterly post-endorsement review increased to 53 percent in the third quarter from 50 percent in the previous quarter, according to test results. Published in the FHA’s quarterly Lender Insight, the results were from post-endorsement technical reviews conducted between July 1, 2016, and Sept. 30, 2016, on 5,973 FHA loans. The initial material defect rate appears to be trending upward since June 2016, when it had stayed flat at 47 percent over the previous eight quarters. The latest loan sample was comprised of 75 percent purchase loans, 10 percent streamline refinances, 7 percent rate-and-term refis, and 8 percent Home Equity Conversion Mortgage loans. Of the targeted loans, 23 percent met FHA requirements but an equal percentage were found to be “deficient,” while 12 percent were deemed “unacceptable” due to ...


January 6, 2017 - Inside FHA/VA Lending

FHA to Implement Methodology for Finding, Classifying Loan Defects

The FHA this year will focus mainly on the completion and implementation of the Defect Taxonomy to help lenders easily identify and categorize loan defects found in FHA-insured loans. At least that was the plan announced by the outgoing Obama administration. The agency urged lenders to be on the lookout for detailed information about Defect Taxonomy and other process improvements in the coming months. “As we begin to implement these changes and transition from current processes, some lenders may experience a temporary decrease in loans selected for review,” the FHA noted in Lender Insight, which updates lenders on the latest rulemakings and policy changes. Announced in June last year, Defect Taxonomy is part of the Blueprint for Access, which embodies three core concepts: identifying a defect, capturing the sources and causes of a defect, and assessing the ...


January 6, 2017 - Inside FHA/VA Lending

FHA Expected to Announce 25 bps MIP Reduction, Industry Thrilled

Industry stakeholders are anticipating an FHA insurance premium reduction soon from the Department of Housing and Urban Development. Sources say a 25-basis-point premium reduction is in the works and HUD Secretary Julian Castro may announce it during his farewell address. His last day in office is Jan. 20, President-elect Donald Trump’s inauguration day. A HUD representative declined to comment on the report citing department policy against “commenting on rumors.” A number of lobbyists and consultants said they have heard similar reports but cautioned it is not a done deal. Two industry executives expressed certainty about the veracity of the report. The idea of a premium cut has been raised with neurosurgeon Dr. Ben Carson, Trump’s nominee for HUD secretary, who will have his Senate confirmation hearing on Jan. 12. A mortgage insurance premium reduction at this time would ...


January 6, 2017 - Inside FHA/VA Lending

Ginnie MBS Program Set New Records in 2016, VA Soared

Ginnie Mae guaranteed a total of $507.46 billion of single-family mortgage-backed securities in 2016, its biggest annual volume ever, according to a new analysis and ranking by Inside FHA/VA Lending. That was up 16.4 percent from the agency’s previous record of $435.80 billion set in 2015. (Those figures include MBS backed by FHA home-equity conversion mortgages, which are not included in the table below or in the rankings on pages 3-5.) In 2016, Ginnie guaranteed $497.03 billion of MBS backed by traditional forward mortgages, also a record, which was up 16.9 percent from the previous year. The biggest factor in last year’s record-setting production was the boom in VA lending, particularly VA refinance loans. Issuers securitized a record $203.03 billion of VA loans last year, up 33.0 percent from the 2015 total. Some 54.3 percent of those loans were refinance transactions. Total VA refi loan ... [4 charts]


Poll

With rates higher this year, there has been talk of lenders liberalizing their underwriting standards in an effort to increase volume and make up for lower refis.

Do you think your shop will loosen standards over the coming three months?

Yes, but not by much.
Yes, by a lot.
Yes and, heck, we may even do non-QM lending.
No, not at all.
No and we may even tighten credit.

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