Mortgage Insurance Profitability

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

February 26, 2015 - Inside Mortgage Finance

Appraisals and Property Issues Accounting For Larger Share of Mortgage-Closing Delays

Property characteristics and appraisals have accounted for an increasing share of the issues that delay closing of purchase mortgages, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Real estate agents participating in the survey cited property issues as causing 22.5 percent of closing delays in January, based on a three-month moving average. That’s up from a 16.5 percent share as recently as October. The increase appears...

February 20, 2015 - Inside FHA Lending

Around the Industry

Issuer Performance Tool. Ginnie Mae expects to release its long-anticipated Issuer Operational Performance Profile system on or about Feb. 24. The IOPP system features a scorecard to measure an issuer’s compliance with Ginnie Mae standards and to compare its performance with those of its peers. Final Tier Ranking Scores. The FHA has issued a reminder that under the Tier Ranking System II (TRSII) Servicer narrative, all scored servicers – including those that have not opted out – may have their names and performance scores published on the Department of Housing and Urban Development’s Tier Ranking System page on at the end of each calendar year. The information is now available for review. TRSII scores servicer compliance with HUD/FHA delinquent servicing guidelines and requirements in the areas of delinquency intervention, loss mitigation based on ...

February 20, 2015 - Inside FHA Lending

Ginnie Mae Servicing Up Slightly in 4Q, 2014

Ginnie Mae servicing volume gained a mere percentage point in the fourth quarter of 2014 from the previous quarter, capping a productive year for servicers of government-backed mortgages, according to Inside FHA Lending’s analysis of agency data. Servicing volume rose by only 1.0 percent to $1.5 trillion during the last three months of 2014 from $1.4 trillion in unpaid principal balance in the first quarter, and increased 4.0 percent year over year. Four out of the top five Ginnie Mae servicers were banks, of which three experienced declines in their servicing portfolios on quarterly and year-over-year bases. The leader of the pack, Wells Fargo, closed out the year with $416.0 billion in Ginnie Mae servicing and capturing 27.8 percent of the market. Its servicing portfolio fell ... [ 1 chart ]

February 20, 2015 - Inside FHA Lending

VA to Issue Final ‘Qualified Mortgage’ Rule in May

The Department of Veterans Affairs expects to have a finalized Qualified Mortgage (QM) rule by May to help clear up some issues that have arisen since the agency issued an interim final rule last spring. The VA issued the interim QM rule for comment on May 9, 2014, to define which VA loans will have QM status under the ability-to-repay (ATR) rule. Issued by the Consumer Financial Protection Bureau, the ATR rule provided temporary QM status to loans eligible for FHA insurance and guaranties by the VA and the Department of Agriculture’s Rural Housing Service. Eligible government-backed loans must be 30-year fixed-rate with no interest-only, negative amortization or balloon features. Total points and fees must not exceed 3 percent of the total loan amount for loans of $100,000 or more. Loans that meet the definition of a temporary VA-eligible QM are considered as in compliance with the ATR rule. They are designated as “safe harbor QMs,” provided they are not ...

February 20, 2015 - Inside FHA Lending

Lenders Urged to Study Changes in New Handbook

FHA lenders should spend the next couple of months familiarizing their staff with the requirements in the FHA’s new Single Family Housing Policy Handbook to ensure proper implementation of the changes on June 15, 2015, according to compliance experts. The impending changes in the Single Family Handbook are complex and significant. Lenders will need proper legal guidance to navigate and understand hundreds of pages of consolidated housing policies and guidance, as well as substantive changes to FHA requirements, said K&L Gates experts in a recent analysis. The handbook is a consolidated, authoritative source of single-family housing policy and is meant as a one-stop resource for FHA lenders. It gathers and streamlines all FHA requirements, which are currently spread throughout various handbooks, mortgagee letters and other documents, making it easier for lenders to ...

February 20, 2015 - Inside FHA Lending

Tech Issues Delay HECM Financial Analysis Rule

The FHA has delayed the effective date of new guidance that will require reverse mortgage lenders to perform a financial assessment of applicants for a Home Equity Conversion Mortgage. The FHA indicated that the change was necessary to allow vendors and the Department of Housing and Urban Development to align their respective software before the new system can be operational. Those familiar with the technology said delivering the required system enhancements should not take long. The FHA said a new effective date should be expected within 30 to 60 days of the original March 2 effective date. It will be announced in a new mortgagee letter, the agency added. The new guidance requires lenders to evaluate HECM borrowers’ willingness and capacity to meet their obligations and to comply with program requirements. “Financial assessment” means doing a much more ...

February 19, 2015 - Inside Mortgage Finance

Private MIs Lose Some Ground to Government Programs in 2014, But End Year With Solid Gains

Private mortgage insurers ended 2014 in better financial shape and with a stronger market position than a year earler, although new business volume fell sharply in the fourth quarter, according to a new Inside Mortgage Finance analysis and ranking. Private MIs reported $46.94 billion in new insurance written during the fourth quarter of 2014, a figure that could change slightly when National MI releases its earnings after Inside Mortgage Finance goes to press. Our estimate for the firm is based on volume trends reported by its competitors. While private MI business was down 12.5 percent in the fourth quarter, total mortgage originations fell...[Includes three data charts]

February 13, 2015 - Inside MBS & ABS

Arch’s New MI Product Covers Jumbos; Will It Aid the Securitization Market?

It’s no secret that the securitization market for jumbo loans has been anemic since the housing bust of 2008, but is mortgage insurance a possible panacea? Arch MI recently set up a new subsidiary that will write coverage on jumbo loans as well as portfolio products. In its press statement, Arch said it created Arch Mortgage Guaranty Co. in part to aid lenders that want to securitize. In a recent interview with Inside MBS & ABS, Arch MI President David Gansberg said...

February 12, 2015 - Inside Mortgage Finance

HUD Secretary Castro Faces the Music in First Encounter With GOP Critics on House Financial Services Committee

Department of Housing and Urban Development Secretary Julian Castro faced the wrath of the GOP majority during a House Financial Services Committee hearing this week on the state of the FHA, focusing on the agency’s recent decision to cut annual mortgage insurance premiums. While Castro may have been warned about stepping into the lion’s den, he appeared ill-prepared for the confrontation with Republicans, unable to answer basic questions such as FHA’s net income, overall delinquency rate and the serious delinquency rate for 2014. Democrats, on the other hand, helped the embattled secretary regain his footing by expressing support for FHA’s efforts and putting perspective on some of FHA’s actions to strengthen the Mutual Mortgage Insurance Fund and help qualify more borrowers for FHA credit. Committee Chairman Jeb Hensarling, R-TX, set...

February 12, 2015 - Inside Mortgage Finance

Two Modestly Bright Spots in Slowing 4Q14 Mortgage Origination Market: Jumbo and Home-Equity Lending

The two best things about the mortgage origination market in the fourth quarter were that it meant 2014 wasn’t as bad as once feared, and that refinance demand had picked up. But a new Inside Mortgage Finance analysis and ranking reveals two other positive trends: the jumbo and home-equity markets continued to gain strength in the final three months of 2014. Lenders originated an estimated $67 billion of jumbo mortgages during the fourth quarter, up 3.1 percent from the previous period. Home-equity production bounced 5.0 percent higher, to an estimated $21 billion. Neither gain was...[Includes two data charts]

February 6, 2015 - Inside FHA Lending

FHA Adds Standard Language to Counseling Notic

The FHA has updated the contents of a notice to delinquent borrowers regarding the availability of approved housing counseling and provided a new template for lenders to explain, in simple terms, the benefits of housing counseling. The latest guidance, Revised Notification to Homeowners of Availability of Housing Counseling Services (Mortgagee Letter 2015-04), also provides a description of counseling services to delinquent borrowers. The revised requirements supplement those outlined in previous mortgagee letters and certain provisions in the HUD handbook. Lenders must comply with the new requirements by April 4, 2015. FHA lenders must provide delinquent borrowers with a notice about the availability of housing counseling by an approved provider and the principal mortgage lender. However, there is no standard language for such notices Hence, the FHA has ...

February 6, 2015 - Inside FHA Lending

FHA Originations Significantly Down in 2014, Refis Up

Overall, 2014 was not a good year for FHA originations as tight underwriting and high loan costs narrowed the band of borrowers able to qualify for an FHA-insured residential loan, according to an Inside FHA Lending analysis of agency data. FHA total endorsements dropped to $35.2 billion, an 8.1 percent drop in the fourth quarter from the previous quarter, with fixed-rate and adjustable-rate mortgages declining by 7.9 percent and 12.7 percent, respectively. FHA purchase originations suffered a decline of 11.3 percent. There was one bright spot: FHA refinances rose a meager 2.2 percent while the percentage of conventional loans that refinanced into FHA saw a more substantial lift of 13.0 percent quarter to quarter. FHA baseline lending (below $417,000) saw volume drop 8.4 percent in the fourth quarter. FHA jumbo loan amounts up to the statutory high-cost loan limit and ... [ 2 charts ]

February 6, 2015 - Inside FHA Lending

Accounting Treatment of Past Due Loans Clarified

The Mortgage Bankers Association notched a win for small, independent issuers after the Financial Accounting Standards Board agreed with the group’s position on the accounting of seriously delinquent loans in Ginnie Mae pools. At issue is whether companies that service pools with loans that are 90 days or more delinquent should put those loans on their balance sheet even if they have no intention of buying the loans out of the pool. According to the MBA, a Big Four accounting firm issued controversial guidance which would have been burdensome for small mortgage-backed securities issuers that have limited funding and no incentive or history of buying defective loans out of pools. After months of exchanges, FASB staff finally agreed with the MBA’s view that the decision process involves two steps. First, a loan must be 90 days or more delinquent and trigger ...

February 6, 2015 - Inside FHA Lending

HECM Policy for Non-Borrowing Spouses Revised

Reverse mortgage lenders now have the option to delay calling a Home Equity Conversion Mortgage due and payable where there is an eligible non-borrowing spouse and a case number assigned prior to Aug. 4, 2014. A delay would postpone foreclosure triggered by the death of the HECM borrower or the last surviving borrower and allow the qualified, non-borrowing spouse to stay in the house for a certain period until the HECM is resolved. Under revised FHA guidance, reverse mortgage lenders are allowed to assign eligible HECMs to the Department of Housing and Urban Development upon the death of the borrower. They have the option of foreclosing in accordance with the contract as endorsed or choose the “mortgagee optional election assignment (MOE).” MOE means the optional assignment selected by a lender for a HECM loan with an assigned FHA case number prior to ...

February 6, 2015 - Inside FHA Lending

Many Doubtful About Effect of FHA Premium Cut

Many industry executives are not impressed with the FHA’s 50 basis point premium reduction, suggesting that the new pricing would not have that big an impact on the mortgage market, according to a new survey by the Collingwood Group. Conducted from Jan. 12 to 21, 2015, the monthly survey said 47 percent thought that President Obama’s estimate of the number of borrowers benefiting from the cut – 250,000 – is too high. Approximately 34 percent said the estimate was “on the mark” and 19 percent said it was too low. In addition, 25 percent of respondents thought the premium reduction was more motivated by politics than a desire to implement a major change in the market. Those respondents who said “too high” also noted that FHA underwriting remains tough and that price differences are not large enough to steer borrowers to FHA. Respondents, however, agreed that ...

February 6, 2015 - Inside FHA Lending

HUD Gives Controversial Fee One More Try

Federal housing regulators once again sought authority from Congress to impose an administrative fee on lenders to support information technology improvements and administrative functions at the FHA – a bid Congress rejected last year. As part of President Obama’s FY 2016 budget, the Department of Housing and Urban Development is proposing to charge lenders up to $30 million in fees to cover FHA salaries and expenses and information technology upgrades. The IT component will focus on strengthening FHA’s risk-management efforts through expanded quality-control reviews, enhanced tools and other risk-management initiatives. Separately, the president requests an appropriation of $174 million in administrative costs to enable the FHA to implement a risk management and program-support process – both critical for FHA’s oversight of ...

February 5, 2015 - Inside Mortgage Finance

FHA Again Seeks Legislation to Make Lenders Pay For IT Upgrades; Officials to Educate Lawmakers

The Department of Housing and Urban Development is once again asking for authority to charge lenders an administrative support fee to fund information technology upgrades and administrative functions at the FHA, a bid that was shot down by Congress last year. As part of the Obama administration’s fiscal 2016 budget proposal, HUD wants to charge lenders up to $30 million in fees, which would be credited as offsetting collections to the FHA’s Mutual Mortgage Insurance program account. The mortgage industry cautioned...

February 5, 2015 - Inside Mortgage Finance

Industry Analysts Expect Adjustments to the GSEs’ LLPAs, Potential Decrease in G-Fees

The Federal Housing Finance Agency is giving no hints on where it’s headed regarding Fannie Mae and Freddie Mac guaranty fees and may not make a final decision until after March 31. But industry observers predict changes in loan-level pricing adjustments and an overall reduction in g-fees. During a press briefing this week, FHFA Director Mel Watt said, “We don’t want to charge excessive g-fees.” He added: “We can’t set them so low” that the government-sponsored enterprises are not compensated for the risk they’re taking on. “People are going to know...

January 29, 2015 - Inside Mortgage Finance

Heightened Refi Activity Expected in First Half of 2015 as New, Revised FHA Premium Takes Effect and Rates Remain Low

Mortgage industry participants are anticipating brisk refinancing activity during the first half of 2015 as a result of a 50 basis point cut in FHA’s annual mortgage insurance premium and expectations that mortgage rates will remain low. Lenders believe that with mortgage rates lingering around 3.75 percent, coupled with the annual MIP rate cut, an estimated one million mortgage loans could be ripe for FHA refinancing. “There’s real business out there,” said Brian Chappelle, a mortgage industry consultant. “Some economists also anticipate another 100,000 in purchase originations this year as a result.” The premium cut makes...

January 29, 2015 - Inside Mortgage Finance

Watt Defends GSEs’ Low Downpayment Offerings, Offers Few Clues on Where G-Fees Are Heading

The government-sponsored enterprises’ new low downpayment programs received a vigorous defense from Melvin Watt, the director of the Federal Housing Finance Agency, at a hearing this week by the House Financial Services Committee. Republicans on the committee attacked the programs from a number of angles, including raising concerns about default rates on mortgages with lower downpayments and fears of a “race to the bottom” with the FHA. “If you carefully look at other considerations and take them into account in deciding whether to back that credit, you can ensure...

January 23, 2015 - Inside FHA Lending

Streamlined FHA Refinances Increase in 3Q14

Streamlined FHA refinance volume increased slightly in the third quarter of 2014 as incentives put in place in 2013 continued to attract FHA borrowers, according to an Inside FHA Lending analysis of agency information. Streamlined refi production rose 2.4 percent in the third quarter of last year, closing a nine-month period with $14.2 billion in new loans. A comparison of nine-month FHA-to-FHA refinance activity, however, shows volume falling a hefty 79.6 percent year over year. As of Sept. 30, 2014, streamlined refinances accounted for 14.3 percent of total FHA originations. The FHA announced a revised streamlined refi program in December 2013 to help FHA borrowers with underwater mortgages to refinance without added cost or penalty. The loan does not require an appraisal or verification of job, income or credit. A perfect, three-month payment history is required and ... [ 1 chart ]

January 23, 2015 - Inside FHA Lending

HUD Clarifies Protections for HECM Spouses

The Department of Housing and Urban Development has made further clarifications to policy guidance related to the treatment of eligible and ineligible non-borrowing spouses of deceased Home Equity Conversion Mortgage borrowers. According to Mortgagee Letter 2015-02, FHA lenders must identify at application any current non-borrowing spouses and must determine whether they are eligible for protection against “due and payable” requirements that kick in upon the death of the HECM borrower. This protection is a provision in the HECM document requiring that full payment of the entire mortgage be deferred for as long as a non-borrowing spouse continues to meet all the requirements of the provision. Specifically, the eligible, non-borrowing spouse must establish, within 90 days from the death of the HECM borrower, legal ownership or other ongoing legal right to ...

January 23, 2015 - Inside FHA Lending

FHA Tweaks Rules for Doing Business with Agency

The FHA has proposed key changes to rules for 203(k) consultants, direct endorsement (DE) underwriters and nonprofit groups that do business with the agency. The changes are part of a draft section, “Doing Business with FHA – Other Participants,” which will be incorporated into the overall Single Family Policy handbook. The draft contains information regarding eligibility, approval and recertification requirements for 203(k) program consultants, direct endorsement (DE) underwriters and nonprofit groups. The FHA posted the draft versions of “Doing Business with FHA – Other Participants in FHA Transactions” and “Quality Control, Oversight and Compliance – Other Participants in FHA Transactions” on its SF Housing Policy Drafting Table for public review and comment. The draft consolidate various existing Department of Housing and Urban Development handbooks, mortgagee letters, housing notices and ...

January 23, 2015 - Inside FHA Lending

Low Rates, High Demand Power VA’s 3Q14 Surge

Production of loans with a VA guaranty was moderately strong in the third quarter of 2014, thanks to lower rates and increased demand for the no-downpayment loans, according to Inside FHA Lending’s analysis of the latest agency data. A 14.1 percent quarter-to-quarter surge helped the industry end last year’s first nine months with a total of $76.3 billion in VA loans, mostly purchase home mortgages taken out by a younger generation of war veterans. VA streamline refinancing also accounted for a substantial chunk of originations, 19.2 percent. Volume jumped from $19.5 billion in the first quarter of 2014 to $26.5 billion the following quarter. Lenders closed out the third quarter with $30.2 billion. Stanley Middleman, chief executive officer of Freedom Mortgage, said VA lending is on the upswing, driven by low interest rates. He thinks the VA home loan guaranty program has been ... [ 1 chart ]

January 23, 2015 - Inside FHA Lending

FHA Likely to Reclaim Share with Premium Cut

The half-percent annual premium reduction the FHA announced recently will likely enable the agency to reclaim the high loan-to-value segment of the mortgage market from Fannie Mae and Freddie Mac, according to analysts. Speaking with some originators that have been looking at the best way to securitize high LTV loans, Deustche Bank securities analysts said the lower FHA annual premium would put pressure on the government-sponsored enterprises to lower the cost of their guarantees. “The grapevine has anticipated for months that [g-fees] have little chance of going up and more chance of going down,” the analysts said. “But the specific risk triggered by the FHA move is that the cost of credit will now drop for high-LTV conventional borrowers.” Even before the FHA policy shift, private mortgage insurers have been pressuring the Federal Housing Finance Agency to ...

January 23, 2015 - Inside FHA Lending

Lenders Expect Modest Refinance Wave

FHA lenders are gearing up to meet an anticipated increase in demand for purchase and refinance loans with mortgage rates falling to near-historic lows coupled by a 50 basis point cut in FHA’s annual insurance premium. Lenders hope the combination of lower mortgage rates and the revised FHA pricing structure will create sufficient incentive for more borrowers to purchase a home or refinance an existing mortgage. For example, Freedom Mortgage, 32nd in Inside FHA Lending’s 2014 ranking of FHA lenders, is looking to hire as many as 500 new employees to handle the anticipated surge following the FHA action. Stanley Middleman, chief executive officer of Freedom Mortgage, expects a robust FHA refinance market during the first half of 2015, tapering off in the second half. “Lower rates, coupled with premium reduction, put a lot of FHA borrowers in a position to get their ...

January 22, 2015 - Inside Mortgage Finance

CFPB’s Interest Rate Checker ‘No Substitute for Shopping,’ Bureau Rep Says as Fallout Continues

The Consumer Financial Protection Bureau this week countered mortgage-industry criticism about its recently launched interest-rate checker tool. “The rate checker is an educational tool and is not a substitute for shopping,” a spokesman for the bureau told Inside Mortgage Finance. “One of the findings of our survey was that consumers who said they were very familiar with available interest rates were almost twice as likely to shop, compared to those who were unfamiliar.” Further, before consumers make a final decision about a loan, they should compare...

January 22, 2015 - Inside Mortgage Finance

First-Time Homebuyers Account for 43 Percent of Agency Purchase Mortgages in 2014, Wells Dominates

First-time homebuyers accounted for close to half of all purchase mortgages in the agency market in 2014, according to a new ranking and analysis by Inside Mortgage Finance. Activity in the sector is also projected to increase, helped by low interest rates, a reduction in FHA premium and the government-sponsored enterprises’ low-downpayment programs. Some $224.35 billion in mortgages to first-time homebuyers were included in agency mortgage-backed securities issued in 2014. The loans accounted for 43.3 percent of all purchase mortgages included in agency MBS during the year. Wells Fargo had...[Includes two data charts]

January 16, 2015 - Inside MBS & ABS

No Large Spikes in Ginnie Mae Prepayments Expected Following FHA Annual Premium Cut

Analysts are expecting Ginnie Mae prepayments to increase moderately in the wake of last week’s announcement that FHA is reducing its annual mortgage insurance premium by 50 basis points. Specifically, the annual MIP would be lowered 50 bps for 30-year fixed-rate FHA mortgages, although the new charges continue to vary depending on loan-to-value ratio and loan amount. Streamlined refinances of FHA loans endorsed before June 2009 are not covered by the new pricing, nor are 15-year FHA mortgages. The timing of the announcement reflects...

January 15, 2015 - Inside Mortgage Finance

Analysts Debate Short- and Long-Term Effects of FHA’s Reduced Annual Premium on Private MI Providers

Now that the hurrahs and uproar over FHA’s reduced annual premiums have died down, analysts are having mixed views regarding its short- and long-term effects on private mortgage insurers. Some analysts predict FHA’s 50 basis-point reduction of the annual mortgage insurance premium charged on 30-year forward loans should have a modest impact on private MI business. The cut should benefit the lower FICO brackets – borrowers with credit scores of 679 and lower – a segment in which private MIs write little business, they suggest. “We believe...

January 15, 2015 - Inside Mortgage Finance

Final PMIER Rules From FHFA Could be Released Along With New Regulatory Language on LLPAs

The Federal Housing Finance Agency is expected to unveil final rules on Private Mortgage Insurer Eligibility Requirements (PMIERs) by the end of March, but there could be a surprise in the works. According to industry lobbyists and MI executives interviewed by Inside Mortgage Finance this week, the FHFA may publish the PMIER rules in tandem with new guidelines on loan-level price adjustments or LLPAs. “The MI industry is...

January 15, 2015 - Inside Mortgage Finance

REITs Push Back Against Proposal to Exclude Captive Insurers from FHLBank Membership

The Federal Housing Finance Agency overstepped its authority when it proposed excluding captive insurers from obtaining membership in the Federal Home Loan Bank System, according to captive insurance companies. Real estate investment trusts – including Redwood Trust and Two Harbors Investment – have used captive insurance companies to gain access to FHLBank financing. “The proposed membership regulations would needlessly exclude an entire category of statutorily permitted members that can further the FHLBank System’s mission as the mortgage finance market continually evolves,” Redwood Trust said in a comment letter to the FHFA. The FHFA issued...

January 15, 2015 - Inside Mortgage Finance

GSE Securitization of Insured Mortgages Down Slightly in 4Q14; MI Penetration Rate Unchanged

Fannie Mae and Freddie Mac securitized $46.91 billion of home loans with private mortgage insurance during the fourth quarter of 2014, down 1.9 percent from the previous quarter, according to a new Inside Mortgage Finance analysis. The drop in private MI volume nearly mirrored the 2.1 percent decline in overall mortgage-backed securities production by the two government-sponsored enterprises over the same period. For all of 2014, the volume of private MI loans included in Fannie/Freddie MBS was down 22.5 percent, while total GSE securitization tumbled 45.4 percent from 2013. While MI-insured purchase mortgages declined by 7.0 percent from the third quarter, securitization of refinance loans with private MI jumped...[Includes two data charts]


With the recent dip in interest rates, how do you feel about loan volumes this year?

We see loan production ending 2015 flat compared to 2014.
We’re optimistic that our originations will rise by 10 to 20 percent year over year.
We’re really optimistic: We expect production to increase by 20 percent or better from last year.
We’re not so bullish. Originations for us may actually fall.

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