Mortgage Insurance Profitability

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

May 27, 2016 - Inside MBS & ABS

Test of Deeper MI Credit-Risk Transfer May Happen Later This Year, But GSEs Still Wary of the Risks

One of the government-sponsored enterprises appears likely to test a form of credit-risk transfer that mortgage bankers have been clamoring for: transactions that allow mortgage sellers to pay lower MBS guarantee fees on loans that have deeper mortgage insurance coverage than is required by the GSE charters. Robert Schaefer, vice president for credit enhancement strategy at Fannie Mae, said there is “a high probability that we will do an MI deal later this year that addresses the pain points” the GSE sees in the deeper MI concept. “We are talking...[Includes one data table]

May 20, 2016 - Inside FHA/VA Lending

Around the Industry

HUD Sends Final Condominium Rule to OMB for Clearance. The Department of Housing and Urban Development has sent a final rule to the Office of Management and Budget that would make it easier for borrowers to obtain FHA financing for certified condominium units. Once issued, the final rule will replace temporary guidance which HUD issued in November last year to ease FHA’s condo approval process. The move is aimed at increasing affordable housing options for first-time and low-income homebuyers. The final rule is expected to reflect measures in the interim guidance, including modification of the requirements for condo project recertification, revised calculation of FHA’s required ownership-occupancy percentage, and expansion of eligible condo-project insurance coverages. IG Scrutinizes HUD Oversight of SFHAs’ Downpayment Assistance Programs. Residential lenders that rely on ...

May 20, 2016 - Inside FHA/VA Lending

Trade Groups Urge Congress to Reevaluate Appraisal Oversight

Trade groups representing lenders, homebuilders and appraisers have asked Congress to hold a hearing this year on the future of appraisal regulation. In a joint letter, five industry groups urged the Senate Committee on Banking, Housing and Urban Affairs to reevaluate oversight of the appraisal industry and the current federal regulatory structure for real estate appraisal. The committee last held an appraisal oversight hearing in 2004. Federal appraisal regulations have been untouched since the enactment of the Federal Financial Institutions Reform, Recovery and Enforcement Act of 1989, the trade groups noted. In addition, the groups asked that both federal and state responsibilities be reassessed to see if they continue to serve consumers and market participants well, as well as promote competition in the marketplace. In addition to federal regulation, states regulate appraisers as well. The groups want to know from Congress whether federal oversight of appraisers is still necessary.

May 20, 2016 - Inside FHA/VA Lending

Appraisers Balk at FHA Rule Adding Home Inspection to Appraisals

There is widespread frustration among FHA appraisers regarding the scope of service they are now required to provide under the Department of Housing and Urban Development’s newly revised single-family policy handbook. While the new handbook brought more clarity to FHA’s lending and underwriting policies, certain changes to property-valuation rules appear to have added home inspection to appraisal work – and appraisers and real estate professionals are not pleased. Many of the so-called changes in the handbook already existed, but one change that stood out is the word “must,” said Martin Wagar, a certified broker/appraiser and president of Wagar & Associates. Appraisers are now required to know the basic appliances that come with the home, how to operate them, and to identify and report any deficiency that may affect their “contributory value” to the property, said Wagar at a ...

May 20, 2016 - Inside FHA/VA Lending

FHA Proposes to Codify HECM Reforms, Consumer Protections

The FHA has proposed to codify key improvements to the Home Equity Conversion Mortgage program and add new protections to senior homeowners to ensure they can remain in their homes and enjoy the benefits of an FHA-insured reverse mortgage. The proposed new HECM consumer protections include full disclosure of all HECM loan products and features. Lifetime interest rate increases on HECM adjustable-rate mortgages would be capped at 5 percent, while annual interest-rate increases on HECM ARMs would be limited to 1 percent. Lenders would be required to pay the HECM’s mortgage insurance premiums until the loan is paid in full, foreclosed on, or a deed-in-lieu of foreclosure is executed. In addition, the rule proposes to amend the definition of “expected average mortgage interest rate” to allow lenders, with the agreement of the borrower, to lock-in the rate prior to ...

May 20, 2016 - Inside FHA/VA Lending

Key Lessons for FHA Lenders from M&T Bank, Guild FCA Lawsuits

There are important details in the recent M&T Bank settlement with the Department of Justice and in this week’s announced filing of a lawsuit against Guild Mortgage that could help lenders avoid a potential false claims lawsuit, according to industry observers. The government’s complaints against the two FHA lenders were brought under the False Claims Act, which penalizes acts that intend to defraud the government and taxpayers. The government has been using this powerful statutory tool in the mortgage arena in its attempt to recover FHA losses arising from fraud and noncompliance with agency requirements. As in previous FCA cases against FHA lenders, both M&T Bank and Guild Mortgage were accused of false certification, lax underwriting, poor quality control, failure to review early payment defaults, and failure to self-report deficient loans and remediate problems in a timely manner. In addition, the ...

May 20, 2016 - Inside FHA/VA Lending

FHA Originations Decline in 1Q16, Production Improves Year-over-Year

FHA activity was lackluster in the first three months of 2016 as loan originations fell 7.8 percent from the prior quarter, according to Inside FHA/VA Lending’s analysis of agency data. The weak first-quarter production of $53.5 billion appeared to continue a trend from 2015, which saw the fourth quarter close with $58.1 billion, down significantly from $73.7 billion in the third quarter. In contrast, FHA originations fared better year-over year. Loan production was up 35.6 percent in the first quarter compared to the same period last year. Purchase lending totaled $36.5 billion in the first three months with overall production trending downward during the period. Borrowers in the 640-679 and 680-719 credit score ranges made up the bulk of new endorsements for January and February, the latest FHA data show. It is unlikely that trend will change even if March endorsements were added. Between all ... [ 2 charts ]

May 12, 2016 - Inside Mortgage Finance

Latest Premium Cuts Make Loans with Private MI More Attractive to Some Borrowers than FHA Loans, Says UI

The recent adjustment in private mortgage insurance pricing could potentially draw high-quality borrowers away from FHA, leaving the agency with a disproportionate share of higher-risk borrowers, according to new research from the Urban Institute. The private MI premium cuts likely will increase the government-sponsored enterprises’ share of low-downpayment, high-credit borrowers, wrote authors Laurie Goodman, director of UI’s Housing Finance Policy Center, and fellow researcher Bing Bai. Announced by individual major private MI companies, the reductions would…

May 12, 2016 - Inside Mortgage Finance

Private MIs Lose Some Ground to Government Mortgage-Insurance Programs in Early 2016

New primary mortgage-insurance activity was down slightly during the first quarter of 2016, with private MIs seeing the biggest slump in new business, according to a new analysis and ranking by Inside Mortgage Finance. A total of $144.11 billion of home loans were originated with some form of MI coverage during the first three months of this year, a 3.7 percent decline from the fourth quarter of 2015… [Includes four charts]

May 6, 2016 - Inside FHA/VA Lending

VA Orders Special Forbearance for Borrowers in Flood Disaster Areas

The Department of Veterans Affairs has called upon holders of VA-guaranteed single-family mortgage loans to extend forbearance to distressed homeowners affected by the severe storms and flooding in Louisiana and Texas. In recent guidance, the VA described measures VA lenders may employ to provide relief to disaster-stricken homeowners. The agency recommended careful counseling to see whether borrower difficulties are related to the storms or have been the result of other events. If appropriate, prepayments may be reapplied to cure or prevent a borrower default. Servicers also may consider loan modification without VA’s prior approval if certain regulatory conditions are met. Although the holder of the loan is ultimately responsible for determining when to initiate foreclosure or complete termination action, the VA has requested a 90-day freeze on ...

May 6, 2016 - Inside FHA/VA Lending

Low Private MI Pricing Could Draw Quality Borrowers Away from FHA

Two studies published this week have found that reduced pricing and declining costs have given conventional mortgages with private mortgage insurance an edge over FHA in the battle for high-quality borrowers. When FHA reduced its annual premium by half a percent for most forward loans 15 months ago, FHA mortgages offered a more affordable payment option for borrowers compared to private MI, according to a new Urban Institute study. FHA’s lower mortgage insurance premium benefited particularly those who could afford a monthly mortgage payment but don’t have the required 20 percent downpayment as well as borrowers with pristine credit, wrote authors Laurie Goodman, director of UI’s Housing Finance Policy Center, and researcher Bing Bai. Until FHA’s 2015 premium cut, private MI was picking up some market share. The FHA price adjustment pushed FHA’s share to ...

May 6, 2016 - Inside FHA/VA Lending

Active-Duty Homebuyers Tend to be Younger, Prefer VA Loan Financing

Younger, active-service soldiers are outpacing non-military homebuyers under the age of 35 in home purchase – and they are buying larger, more expensive homes with VA loans, according to a new National Association of Realtors survey. The NAR survey, 2016 Veterans & Active Military Home Buyers and Sellers Profile, found quite a few contrasts between active-service military homebuyers and those who have never served. Of all homebuyers, 18 percent were veterans and 3 percent were in active military service. Of all home sellers, 21 percent were vets and 1 percent were active-military. According to the survey, the typical active-service homebuyer was a lot younger (median age of 34 years old) than non-military buyers (40 years old). The active-military homebuyer was more likely to be married and have several children living in the household. Consequently, they prefer larger single-family homes. Interestingly, the ...

May 6, 2016 - Inside FHA/VA Lending

Correspondent Channel Plays Huge Role in 1Q FHA Purchase Lending

Retail loan originations account for most new VA lending, but the correspondent channel plays an outsized role in the FHA market, especially in purchase-mortgage lending, according to a new analysis of Ginnie Mae mortgage-backed securities data by Inside FHA/VA Lending. Over half (51.1 percent) of VA loans securitized through Ginnie MBS in the first quarter of 2016 were retail originations, but only 39.1 percent of FHA loans came through that channel. The biggest source of FHA loans was correspondent lenders, which accounted for 45.8 percent of loans securitized during the first three months of this year. That was actually slightly below the 49.2 percent correspondent share of FHA loans back in 2014 and 46.8 percent last year. Correspondents accounted for well over half (53.9 percent) of FHA purchase mortgages during the first quarter, while playing a more ... [ 3 charts ]

May 6, 2016 - Inside Nonconforming Markets

News Briefs

Caliber Home Loans recently loosened the standards for one of its non-qualified mortgage products. The lender’s “Fresh Start” mortgage now allows loan-to-value ratios up to 85.0 percent, up from 80.0 percent. And private mortgage insurance isn’t...[Includes five briefs]

May 5, 2016 - Inside Mortgage Finance

House Passes Bill Encouraging Use of Private Flood Insurance; Requiring GSEs to ‘Accept Flood Insurance’ Raises Concerns

The House of Representatives last week unanimously approved legislation that would require federal agencies to accept private flood insurance for residential properties if it complies with state insurance laws and regulations. Approved by a vote of 419-0, H.R. 2901, the Flood Insurance Market Parity and Modernization Act, would remove regulatory barriers and clarify Congress’ intent to encourage the use of private flood insurance to compete with the National Flood Insurance Program (NFIP). Specifically, the bill lifts certain federal restrictions placed on insurance companies and gives states more flexibility to license and regulate private flood insurance. Under current law, homeowners are limited...

April 22, 2016 - Inside FHA/VA Lending

Annual MIP Cut Helped Spur FHA Streamline Refi Activity in 2015

FHA’s Streamline Refinance program went through an erratic pace in 2015 as business exploded in the second quarter and declined over the second half of the year. FHA lenders closed 2015 with $67.5 billion in total streamline refis, a 252.4 percent improvement over volume in 2014. Production fell 30.0 percent in the fourth quarter from the prior quarter. The second-quarter spike – which caused streamline refi volume to jump from $12.1 billion in the first quarter to $25.0 billion in the second quarter – was fueled apparently by FHA’s reduction of the annual mortgage insurance premium. In January 2015, the FHA cut its MIPs on 30-year loans, making it less expensive to carry an FHA home. Under the revised MIP schedule, a 30-year FHA streamline refi with a loan-to-value ratio over 95 percent is charged an annual MIP of 0.85 percent. For a 30-year loan under 95 percent LTV, the annual MIP is ... [ 1 chart ]

April 21, 2016 - Inside Mortgage Finance

Six Months After Implementation of TRID, Mortgage Closing Times Starting to Improve

Closing times for purchase mortgages are starting to recover from delays tied to the TRID disclosure rule, according to results from the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. The Consumer Financial Protection Bureau’s final rule combining disclosure requirements of the Truth in Lending Act and the Real Estate Settlement Procedures Act took effect in early October. Average closing times for various mortgage types increased in the following months, though performance has improved recently, according to HousingPulse. For example, the original closing time for purchase mortgages with a downpayment of at least 20 percent where the loan will be delivered to the government-sponsored enterprises was...

April 21, 2016 - Inside Mortgage Finance

New Jersey Nonbank Pays $113 Million to Settle FHA Quality Control, Underwriting and Reporting Issues

Freedom Mortgage Corp. has agreed to pay the federal government $113 million to resolve alleged violations of the federal False Claims Act and FHA requirements in connection with the origination of FHA-insured single-family mortgages. The April 15 settlement agreement between the New Jersey-based mortgage lender and the Department of Justice comes in the wake of a record $1.2 billion settlement between DOJ and Wells Fargo, which earlier admitted to false certification of defective mortgages for FHA insurance and failure to file timely reports on several thousand loans that were materially defective or badly underwritten. Like Wells Fargo, Freedom Mortgage failed...


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