Mortgage Insurance

Browse articles from all of our Newsletters related to Mortgage Insurance.

November 25, 2015 - Inside FHA/VA Lending

Around the Industry

Menendez Introduces HAWK Amendment in T-HUD Appropriations Bill. The National Association of Realtors recently sent a thank-you note to Sen. Robert Menendez, D-NJ, for introducing an amendment to H.R. 2577, the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act of 2016, to restore HUD’s authority to offer the Homeowners Armed with Knowledge (HAWK) program. Lawmakers who were concerned about the financial condition of the FHA Mutual Mortgage Insurance Fund denied funding for the HAWK program last year in a continuing spending bill, effectively stalling the program for a year. The HAWK program is a key component of the FHA’s Blueprint for Access, which was designed to open up the credit box for underserved borrowers. Specifically, program participants will benefit from reductions in FHA premiums once they complete ...

November 25, 2015 - Inside FHA/VA Lending

FHA Issues Interim Guidance for Approving Condo Recertifications

The FHA has issued temporary guidance for approving condominium projects for agency financing – a good first step, according to industry groups. Stakeholders have been waiting for a broader rewrite of the condominium rules for years, and they see the interim guidance as limited but positive. Announced on Nov. 13, the guidance is in place for a year while the FHA works on a more comprehensive rule that addresses all condominium lenders’ concerns. The temporary guidelines modify the requirements for condominium project recertification. It can cost up to $3,000 and, in some cases, take more than a year, to complete a condominium recertification project. The certification is good for only two years. Condo projects run afoul of FHA rules when the certification lapses, rendering the ...

November 25, 2015 - Inside FHA/VA Lending

Actuarial Report Positive on MMIF; Pricing Adjustment More Likely?

Despite FHA’s denial of further mortgage insurance premium reductions any time soon, stakeholders are holding out hope for another cut in the near future. Those supporting the idea of another pricing adjustment say it could open the door wider for more borrowers to use the FHA single-family program and generate the volume needed to offset any potential revenue loss that may result from the reduction. But Housing and Urban Development Secretary Julian Castro and his top officials have denied any plans of reducing MIPs. Castro has called such talk “premature,” despite a positive FY 2015 actuarial evaluation of the FHA’s Mutual Mortgage Insurance Fund, which some claim could be used to justify another premium reduction. Principal Deputy Assistant Secretary for Housing and Interim FHA Chief Ed Golding, in a press briefing, said the focus is elsewhere and not on ...

November 25, 2015 - Inside FHA/VA Lending

FHA Enjoys a Robust Year as MIP Cut Boosts New Loan Originations

The first nine months of 2015 have seen a tremendous increase in FHA single-family originations as borrowers took advantage of a 50 basis-point premium reduction implemented earlier this year, according to Inside FHA/VA Lending’s analysis of agency data. Total FHA loan production during the first nine months of 2015 was up a whopping 81.3 percent increase. Data also showed a 13.1 percent increase in the third quarter from the prior quarter. It is hard to imagine that back in February this year, we reported a dismal ending for 2014, where overlays and high-loan costs caused an 8.1 percent decline in FHA endorsements in the fourth quarter and a 36.6 percent drop from 2013. In 2015, FHA fixed-rate originations increased 12.7 percent from the second to the third quarter, and rose 86.0 percent on a year-to-date basis. In 2014, conversion ... [ 2 charts ].

November 13, 2015 - Inside FHA/VA Lending

Around the Industry

FHA to Unveil FY 2015 MMIF Audit Results. On Nov. 16, the FHA will release its 2015 annual report to Congress, a document that historically has included the results of the annual actuarial audit of the Mutual Mortgage Insurance Fund, or MMIF. Early in the day, Ed Golding, principal deputy assistant secretary for the Department of Housing and Urban Development’s Office of Housing, is scheduled to brief reporters on the report and take questions. As reported by Inside FHA/VA Lending, the reduction in the annual mortgage insurance premium earlier this year has put the MMIF on an accelerated path to recovery. But whether the ensuing increase in FHA production – which translates into additional premiums – will be enough to get the fund back to its statutory 2 percent capital reserve ratio remains ...

November 13, 2015 - Inside FHA/VA Lending

VA Sets Policy for Determining Marital Status in Loan Applications

The Department of Veterans Affairs has issued a policy clarifying how VA lenders should process and underwrite mortgage loan applications when borrowers assert they are married. The policy, which took effect immediately, requires lenders to accept a veteran’s assertion of spousal status when he or she is applying for VA home loan benefits. The policy came a few months after the U.S. Supreme Court held, in Obergefell v. Hodges, that the Fourteenth Amendment of the U.S. Constitution requires a state to issue a license for same-sex marriages and to recognize as valid and legal such marriages performed out of state. The SCOTUS decision opened the door for VA to recognize all same-sex marriages regardless of a veteran’s state of residence. The policy also directs VA personnel to apply the same level of scrutiny to all veteran marriages, regardless of whether they are ...

November 13, 2015 - Inside FHA/VA Lending

MPF Program, Ginnie Mae Unveil Broader Government MBS Product

The Federal Home Loan Bank System is seeking to boost its share of government-backed lending and the Ginnie Mae market with a new servicing-release option for FHA, VA and rural housing mortgages that are sold into the Mortgage Partnership Finance program. The new feature adds to an existing servicing-retained execution in the MPF Government Mortgage-Backed Securities program. The current servicing-retained component requires participating lenders to service loans they originate and sell into the MPF conduit. The servicing-release option from Nationstar Mortgage, a top-10 mortgage servicer based in Dallas, will provide lenders with greater pricing flexibility so they can become more competitive in the communities they serve, said Matt Feldman, president of the Chicago FHLB. Only FHLBank members that are participants in MPF can use the government MBS program. In order to ...

November 13, 2015 - Inside FHA/VA Lending

PHH Mulls Continued Participation In FHA, Will Proceed Cautiously

Facing the possibility of a potential False Claims Act lawsuit, PHH Corp. is reconsidering its participation in the FHA mortgage insurance program. Though PHH’s FHA segment represents only 3 percent of its mortgage volume over the past 12 months, the company will proceed cautiously as it evaluates the risk-adjusted return of FHA products and programs, said Glenn Messina, PHH president and chief executive.Ranked 50th among FHA lenders as of June 30, 2015, PHH expects more regulatory challenges in 2016 as well as rising compliance costs, said Messina during a third-quarter earnings call. In its latest quarterly filing, PHH disclosed receiving a subpoena from the inspector general of the Department of Housing and Urban Development for documents related to, among other things, FHA loan origination and underwriting practices. Like several other FHA lenders, PHH is ...

November 13, 2015 - Inside FHA/VA Lending

GNMA Issuers Reach Deep for FHA Loans, Get More Cautious

Mortgage lenders are more willing to expand the credit box for FHA borrowers, but they appear to be getting more cautious about FHA lending, according to a new Inside FHA/VA Lending analysis of Ginnie Mae mortgage-backed securities data. Over two thirds of FHA loans securitized in the first nine months of 2015 had credit scores below 700, and 6.2 percent of them had scores of 620 or lower. By comparison, 47.0 percent of VA loans were below 700 and just 4.4 percent were in the lowest category. But FHA lenders became more cautious as the year wore on. In the first quarter, 6.8 percent of FHA loans had scores of 620 or lower. That fell to just 6.0 percent in the third quarter. The FHA purchase-mortgage sector skews even further away from the riskiest borrowers and toward safer ground. The share of FHA purchase loans with scores of 620 or lower fell from 5.8 percent in the first ... [ 2 charts ]

November 13, 2015 - Inside FHA/VA Lending

FHA Issues Interim Guidelines, Relaxes Condo Approval Standards

The FHA has issued temporary guidelines to ease the condominium approval process and increase the number of condo projects eligible for FHA financing. The guidelines take effect immediately and will be in place for one year to give FHA enough time to write and implement a more comprehensive rule. With the issuance of the guidelines, FHA anticipates an increase in the pool of FHA-eligible condo projects, which in turn will provide more affordable housing options for first-time and low- to moderate-income borrowers. The interim guidelines modify three key areas where lender complaints have been common. First, the guidelines revise requirements for recertification of condo projects. FHA-approved condo projects require recertification after two years to ensure that the project is still in ...

November 12, 2015 - Inside Mortgage Finance

Private MIs Post Another Strong Quarter, But Still Appear to Be Losing Market Share to FHA

The private mortgage insurance industry did more business during the third quarter than it has in any period since the housing market came unglued in early 2008 and rolled to another solid round of financial results, according to an Inside Mortgage Finance ranking and analysis. But early indicators suggest the FHA and VA government insurance programs continue to provide stiff competition in the primary MI market. While neither government agency has released new business data for the third quarter, trends in the Ginnie Mae program suggest that the private MI share of new primary coverage drifted down to 33.8 percent in the third quarter, the lowest it’s been since the beginning of 2013. Mike Zimmerman, senior VP for investor relations at Mortgage Guaranty Insurance Corp., said...[Includes three data tables]

November 5, 2015 - Inside Mortgage Finance

AIG Not Likely to Part With MI Unit United Guaranty … Unless It Gets the ‘Right Offer

American International Group this week cleared the air regarding a potential spinoff of its profitable mortgage insurance division, saying it likes the MI business very much and considers it a “core” asset. In other words, it’s not for sale. Then again, during AIG’s third-quarter earnings call, President and CEO Peter Hancock left open the door to a possible sale of United Guaranty, saying that “over time” the company likes to maintain its flexibility and that if the “right offer to monetize assets” came along, it would ponder a bid. “It gives...

October 30, 2015 - Inside FHA/VA Lending

FHA Extends Due and Payable Timelines for Defaulted HECMs

The FHA has extended the period during which servicers must identify delinquent Home Equity Conversion Mortgage loans that have become due and payable or against which an initial legal action has been taken because they are no longer curable. In April, the FHA issued guidance that granted mortgagees 180 days, or until Oct. 23, 2015, to review their portfolios and bring defaulted HECM loans into compliance with the mandatory foreclosure timelines. On Oct. 16, the agency extended the timelines through Jan. 18, 2016. The initial guidance laid out loss mitigation options that HECM servicers may provide when property charges are not paid in accordance with the terms of the HECM loan. HECM loans that are subject to a repayment plan may continue as long as they remain current, said the FHA. Otherwise, lender/servicers must follow the requirements in the April guidance. The loss mitigation options are not available ...

October 30, 2015 - Inside FHA/VA Lending

Trade Group Asks FHA to Remove Uncertainty Over Use of DAPs

A trade association representing large financial institutions has asked the FHA to clarify its policy regarding the use of downpayment assistance programs on home purchases financed with FHA mortgage loans. The differences in the interpretation of the Department of Housing and Urban Development’s inspector general and the FHA of downpayment assistance programs (DAP), especially by state housing finance agencies, has created uncertainty among lenders, according to the Consumer Mortgage Coalition. In a letter to HUD Secretary Julian Castro, the CMC expressed concern that lenders may become unwilling to continue offering loans with assisted financing because of legal uncertainty. “This would be unfortunate for moderate-income borrowers nationwide, and it would unnecessarily limit the ability of [state housing finance agencies] to function,” the group said. SHFAs do not rely on taxpayer funding for ...

October 30, 2015 - Inside FHA/VA Lending

VA, FHA Issue Guidelines to Ensure Lender Compliance with TRID Rule

The Department of Veterans Affairs and the FHA have issued guidelines concerning the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosure (TRID) rule as it relates to VA- and FHA-backed mortgages. The new TRID rule covers loan applications received on or after Oct. 3, 2015. It replaced Truth-in-Lending-Act disclosures and the Department of Housing and Urban Development’s closing (HUD-1) settlement statement. The rule requires that all covered loans be closed using the new closing disclosure. The VA has announced new closing-disclosure guidelines and a new mandatory method for the stacking order of loan files selected for full-loan review. According to the VA, all files selected for full review on or after Oct. 3 may include the HUD-1 statement. The agency is aware that loans will be requested that have the HUD-1 closing document, and that it will perform the full file review with the ...

October 30, 2015 - Inside FHA/VA Lending

California HFA to Offer VA Loans With 5% Downpayment Assistance

The California Housing Finance Agency is planning to add VA loans to its list of mortgage programs, with an offer of downpayment assistance. Kenneth Giebel, CHFA director of homeownership, said the agency plans to have a VA loan program in place in early 2016 to complement other first-mortgage programs. In addition, the agency is considering adding the U.S. Department of Agriculture’s guaranteed single family home loan program to its current product menu. Currently, the CHFA is working with the California Department of Veterans Affairs (CalVet) in providing home loans to qualified veterans and servicemembers. There are 31 military installations located throughout California, home to nearly 2 million veterans. A CalVet VA loan utilizes a veterans’ or service member’s VA eligibility and provides 100 percent financing. The department also has a Fannie Mae 97 loan-to-value ratio product, which ...

October 30, 2015 - Inside FHA/VA Lending

Industry Pressure Forces HUD to Drop Proposed Filing Deadlines

Servicers of FHA mortgage loans dodged a regulatory bullet after the Department of Housing and Urban Development withdrew part of a recently proposed rule, which would terminate insurance coverage if an FHA claim were not filed within a certain period. HUD withdrew the provision under heavy pressure from mortgage lenders, servicers and other industry participants, who expressed concern over the punitive penalty for missing prescribed filing deadlines. Published on July 6, 2015, the proposed rule, among other things, would have established a deadline for filing FHA insurance claims to address the problem of delayed claims filing, which put a strain on FHA resources. Late filings were tolerated previously but the problem worsened after the financial crisis when servicers began submitting FHA claims in bunches, causing processing bottlenecks and longer turnaround time for ...

October 30, 2015 - Inside FHA/VA Lending

Lenders Call for Further MIP Cut, Analysts Say Reduction Unlikely

Community lenders renewed their call for a further cut in FHA mortgage insurance premiums amid speculation that a healthier FHA insurance fund could lead to another reduction. But analysts are less optimistic about another premium reduction for different reasons. In a letter to FHA Acting Commissioner Edward Golding, the Community Home Lenders Association asked that the annual MIP be reduced to the pre-crisis level of 0.55 percent when FHA’s capital reserve ratio returns to the statutory 2.0 percent level. The call comes less than a month before FHA issues its highly anticipated annual actuarial report on the state of the Mutual Mortgage Insurance Fund. There is speculation within the mortgage industry that the FY 2015 report will show improved FHA fundamentals, bringing the fund closer or over its statutory 2.0 percent capital reserve ratio. The report is expected to highlight the positive results of a ...

October 30, 2015 - Inside FHA/VA Lending

Lawmakers Call on HUD to Ease Rules to Boost Flagging Market

A bipartisan group of lawmakers is clamoring for reform of existing FHA condo rules, saying that temporary guidance issued by the Department of Housing and Urban Development in 2012 has failed to boost the condominium market. In a letter to HUD Secretary Julian Castro, 69 House members called for policy changes that would relax FHA restrictions to facilitate the purchase and sale of condominiums. Condos are the most affordable homeownership option for first-time homebuyers, small urban families and elderly Americans, the letter pointed out. “The FHA certification process can be daunting, especially for smaller properties and those without professional management,” it stated. “It takes significant time and resources to collect the required information and provide the necessary paperwork to become certified, and this must be done every two years.” Lapsed condo certifications are also a problem because ...

October 30, 2015 - Inside FHA/VA Lending

GNMA Reports Gain in Servicing Securitized FHA Mortgage Loans

Servicing of FHA loans pooled into Ginnie Mae mortgage-backed securities rose 2.1 percent in the third quarter of 2015. Three megabanks in the top five-servicer tier accounted for a significant share of the market. Ginnie Mae servicers of FHA collateral reported $969.0 billion outstanding at Sept. 30, with Wells Fargo accounting for 27.9 percent of total servicing volume. Wells Fargo, Chase Home Finance (#2) and Bank of America (#5) combined to service 39.3 percent of FHA outstanding as of the end of the quarter. PennyMac Corp. closed the quarter with a $57.7 billion FHA servicing portfolio, good enough for third place and 6.0 percent of the market. Fourth-ranked NationStar Mortgage reported a $53.6 billion servicing portfolio at the end of the ... [ 1 chart ]

October 30, 2015 - Inside FHA/VA Lending

VA, FHA Late Payments Rise In 3Q, 30-,60-Day Delinquencies Increase

The overall delinquency rates for VA and FHA mortgage loans rose in the third quarter of 2015 due to increases in both 30-60 and 60-90 day delinquencies, according to agency data. Approximately 96.5 percent of VA loans in Ginnie Mae mortgage-backed securities remained current in the third quarter, down slightly from the second quarter, suggesting more borrowers have become past due during the period. VA 30-day and 60-day delinquencies rose to 2.44 percent and 0.23 percent, respectively, while the percentage of VA loans 90 days or more past due fell to 0.84 percent. The remaining principal balance of securitized VA loans was $426.8 billion, up 5.1 percent from the prior quarter. Meanwhile, the share of FHA loans in Ginnie Mae pools that were current dropped to 93.8 percent in the third quarter from 94.2 percent in the prior quarter. FHA 30-day delinquencies increased to ... [ 1 chart ]

October 29, 2015 - Inside Mortgage Finance

Everybody Agrees on FHA’s Upward Revenue Arc, No Outright MIP Cut; Analysts Say More Policy Changes Likely to Come

Although most analysts and industry observers agree that the FHA cut in mortgage insurance premiums, effective in January, has resulted in stronger purchase volumes and credit availability, opinions vary as to whether another reduction is on the way. The FY 2014 independent actuarial audit of the FHA Mutual Mortgage Insurance Fund projected FHA’s total loan production in fiscal 2015 at $124 billion. With the FHA pricing adjustment, production is now expected to increase by 60 percent, with total production estimated at $200 billion by the end of the fiscal year, said Brian Chappelle, an industry consultant. As program fundamentals trend upward, Chappelle is...

October 29, 2015 - Inside Mortgage Finance

Mortgage Origination Volume Slipped in 3Q15, But Large Lenders Appeared to Build Market Share

Mortgage production ran into a seasonal buzz-kill and stiffer headwinds from interest rates during the third quarter of 2015, leading to a modest decline in volume, according to a new Inside Mortgage Finance market analysis and ranking. An estimated $455.0 billion of single-family first-lien mortgages were originated during the third quarter, down 7.1 percent from the second quarter of 2015. But on a year-to-date basis, total originations were up 42.9 percent from the first nine months of last year. In fact, at $1.350 trillion, production through the end of September had already topped last year’s $1.300 trillion. A lot of this year’s increase came...[Includes two data tables]

October 23, 2015 - Inside MBS & ABS

Private MIs Propose Front-End Risk Sharing to Lower G-Fees; Concept May Not Gain Traction

The trade group for private mortgage insurers this week said Fannie Mae and Freddie Mac programs that would allow sellers to obtain deeper MI coverage, up to 50 percent of the home’s value, could help lower guaranty fees charged by the two government-sponsored enterprises. U.S. Mortgage Insurers said greater front-end risk sharing almost doubles the amount of loss protection to the GSEs and allows them to reduce their committed capital for this risk by about 75 percent. As a result, the group noted...

October 23, 2015 - Inside MBS & ABS

Possibly Due in Late 2015, FHFA Rule on Captives And FHLB Membership Could End in a Compromise

The Federal Housing Finance Agency is toying with the idea of “grandfathering” the membership of captive insurance affiliates in the Federal Home Loan Bank system, while blocking out others, according to industry observers tracking the matter. Such a final rule would benefit MBS-investing real estate investment trusts that gained entry through a captive. A few years back, several REITs found a loophole in the FHLBank membership rules and exploited it before the FHFA put a moratorium on new captives joining the system. The moratorium expired...

October 23, 2015 - Inside MBS & ABS

Analysts Warn that Credit Quality of New MBS in the TBA Market Is Declining, Increasing Prepayment Risk

A number of factors are making new MBS in the to-be-announced market less attractive to investors than MBS issued a few years ago, according to a report from Deutsche Bank Securities. “Aggressive servicers keep picking up market share, credit quality keeps softening and loan balances edge up,” the analysts said. “It adds up to declining quality for TBA MBS.” While those trends certainly aren’t new, Deutsche Bank said...

October 22, 2015 - Inside Mortgage Finance

HUD Caves to Servicers, Withdraws Proposal On Filing Deadlines for FHA Insurance Claims

The Department of Housing and Urban Development late last week withdrew a controversial proposed rule that aimed to speed the process by which residential servicers file FHA insurance claims. A number of industry participants were critical of the proposed claims-filing deadline, warning that it would prompt significant problems. Among other provisions, the proposal issued in July would have established a deadline for insurance claims to be filed with the FHA. “This new deadline will ensure FHA can effectively manage and process timely claims,” HUD said at the time. Originally, the agency proposed...


Should the FHA cut premiums?

Yes, the MMIF has surpassed the 2 percent minimum. It’s time to help first-time home buyers.
Yes, but not until mid-2016 at least, when we see how the fund is doing.
No. The MMIF needs to rebuild and prepare for another potential downturn – just in case.
No. We believe the minimum ratio should actually be raised to 4 percent or higher.
I am undecided.

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