Mortgage Insurance Profitability

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

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...

April 15, 2016 - Inside Mortgage Trends

Mortgage Insurance Claiming Slightly Larger Share of Agency Purchase Market

More loans securitized by Fannie Mae, Freddie Mac and Ginnie Mae are carrying mortgage insurance, either private MI or coverage through government-insured programs, according to a new Inside Mortgage Trends analysis of mortgage-backed securities data. The trend toward more insured loans has been gradual over the past two years. In 2014, purchase-money loans with no mortgage insurance accounted for 39.9 percent of new MBS issued by ... [Includes one data chart]

April 14, 2016 - Inside Mortgage Finance

Wells Fargo Agrees to Pay $1.2 Billion to Resolve Charges Of Improper FHA Lending Practices Over 9-Year Period

Wells Fargo last week reached an agreement to pay $1.2 billion to the federal government to resolve certification and reporting violations in connection with FHA-insured loans. The settlement is the largest recovery for loan-origination violations in FHA history, according to Housing and Urban Development Secretary Julian Castro. The April 8 court filing details an agreement in principle, which Wells Fargo announced in February, that resolves not only a pending lawsuit filed by the U.S. Attorney for the Southern District of New York, but also a number of potential claims dating as far back as 15 years in some cases, according to a statement issued by Wells Fargo. According to the settlement, Wells Fargo “admitted...

April 14, 2016 - Inside Mortgage Finance

Next Up for the Blackstone Group and Finance of America: Non-QM Investing. How Big Can It Get?

Over the past year, The Blackstone Group has been aggressively expanding into many facets of the mortgage business and is now ready to make what might be considered a bold move: investing and originating in residential loans that don’t meet the qualified-mortgage test. But just how big might Blackstone get? That’s hard to say at this point. A source inside the company, who spoke under the condition his name not be used, confirmed...

April 14, 2016 - Inside Mortgage Finance

Fannie and Freddie Securitized Fewer Private MI Loans In Early 2016 as Purchase-Mortgage Market Stalled

The flow of home loans covered by private mortgage insurance into new Fannie Mae and Freddie Mac mortgage-backed securities fell by 11.5 percent during the first quarter of 2016, according to a new Inside Mortgage Finance analysis and ranking. That decline mirrored the 11.6 percent drop in purchase-mortgage securitization from the fourth quarter by the two government-sponsored enterprises. A slight uptick in refinance activity partly offset the slide in purchase-mortgage business. Private MIs do...[Includes two data tables]

April 8, 2016 - Inside FHA/VA Lending

Freedom Mortgage to Acquire Chase’s Rural Housing Business

Freedom Mortgage is acquiring the correspondent origination assets of JPMorgan Chase’s rural housing business for an undisclosed amount. The Mount Laurel, NJ-based lender will operate the business under its own brand and retain the current executives and employees who have been originating rural housing loans through Chase’s 23-year old correspondent business. Loans backed by the U.S. Department of Agriculture comprise less than 5.0 percent of Chase’s 2015 mortgage banking business. USDA loans account for 1.04 percent of total mortgage originations in 2015, according to Inside Mortgage Finance. In its announcement, Chase said the move is part of a company effort to simplify its loan-origination business model and to focus its lending. Chase said it would continue to ...

April 8, 2016 - Inside FHA/VA Lending

HECM Lenders Get Some Latitude On Due-and-Payable Requests

The FHA has issued new, more permissive loss-mitigation guidelines for Home Equity Conversion Mortgages, including an optional extension for mortgagees when submitting due-and-payable requests. Additionally, the guidelines allow mortgagees to cure a HECM borrower’s taxes and/or insurance defaults as long as the FHA incurs no cost and the mortgagee agrees to refrain from seeking loan assignment for at least three years. The guidelines further remove a previous restriction prohibiting the use of the permissive loss-mitigation options announced in Mortgagee Letter 2015-11 for borrowers in foreclosure. Accordingly, for HECM loans that were in the process of foreclosure prior to the issuance of ML-2015-11, mortgagees may assess those borrowers for a repayment plan in accordance with the mortgagee letter. The repayment plan must have the ...

April 8, 2016 - Inside FHA/VA Lending

Nonprofits’ REO Buys Questioned, HUD IG Finds Itself in a Quandar

Policy changes are underway to prevent nonprofit groups from gaining an unfair advantage over legitimate investors in purchasing real estate-owned properties under the Department of Housing and Urban Development’s single-family property disposition program. An audit conducted by the HUD inspector general found that certain nonprofits were acting as investors while purchasing REO homes through HUD’s distressed-asset sales program. While this may seem to be a case of nonprofits gaming the system, the IG said no regulations were violated because program requirements did not explicitly bar nonprofits from acting as investors during the exclusive listing period. HUD’s distressed-asset sales program is designed to clear the department’s REO inventory in a manner that expands homeownership opportunities, strengthens neighborhoods and communities, and ensures a ...

April 8, 2016 - Inside FHA/VA Lending

Not Reporting Material Events on Time Causes Recertification Delay

Approximately 300 FHA lenders are seeing their recertifications held up because they failed to report in a timely manner events or changes that may affect their eligibility to participate in FHA programs.Delays are occurring because lenders have failed to notify the FHA of material events as soon as they have occurred and waited until the annual recertification to report them, according to industry sources. Under rules of the Department of Housing and Urban Development, a notice of material event alerts the agency to a significant change to the information provided by the lender at application that may affect its status as an FHA-approved lender. The department strongly encourages lenders to notify FHA within 10 days of the event to prevent delays during the annual recertification. Each FHA lender must complete the annual recertification process in order to retain its FHA approval. Lenders must ...

April 7, 2016 - Inside Mortgage Finance

United Guaranty Announces Initial Stock Offering As Part of a Move to Separate from Parent AIG

United Guaranty last week filed papers for an initial public offering with the Securities and Exchange Commission as a first step to split from its parent company, American International Group, Inc. UG, the mortgage insurance subsidiary of AIG, has filed a proposed aggregate offering of $100 million of common stock but pricing has not been determined. The IPO will not launch until later this year, but if the weak IPO market picks up soon, “it would change things a great deal,” according to an analysis by investment research firm Seeking Alpha. In late January, AIG announced...

April 1, 2016 - Inside The GSEs

MI United Guaranty Files IPO; GSEs Must Approve the Deal. But When?

United Guaranty, the market leader in private mortgage insurance – and a key partner of the GSEs – made it official this week, filing for an initial public offering of common stock in a transaction valued at $100 million. UG’s parent company American International Group will retain ownership of 80.1 percent of the firm, with the public getting the balance. As the company notes in its IPO documents, Fannie Mae and Freddie Mac must approve the spin-off. But when that will happen remains unclear. No specifics are addressed in the S-1 filing with the Securities and Exchange Commission and a spokesman for UG declined to comment on the matter.

April 1, 2016 - Inside Mortgage Trends

Nation’s Largest MI UG Files IPO in Tough Market

United Guaranty, the largest private mortgage insurer in the nation, filed to go public this week, touting its market position, longevity and the strong profits it posted over the past two years. Then again, it’s been a tough market for mortgage-related stocks this year. Overall, United Guaranty hopes to raise $100 million by selling 19.9 percent of the firm, with its parent company, American International Group, retaining the balance while setting the stage for eventual ...

March 25, 2016 - Inside FHA/VA Lending

Around the Industry

House Financial Services Committee Passes Flood Insurance Bill. The House Financial Services Committee recently voted to advance legislation that would provide a private flood insurance alternative to the federal National Flood Insurance Program for homeowners required to purchase flood insurance. H.R. 2901, the Flood Insurance Market Parity and Modernization Act, passed by a unanimous vote of 53-0 and was sent to the House floor for consideration. A Senate counterpart bill, S. 1679, which was reintroduced by Sen. Dean Heller, R-NV, last year, is awaiting action in the Committee of Banking, Housing and Urban Affairs. Both bills were introduced jointly in both the House and the Senate in 2015. Currently, due to uncertainty as to whether the coverage satisfies federal requirements, many lenders are reluctant to issue mortgages for homes with ...

March 25, 2016 - Inside FHA/VA Lending

Lenders Urged to Assess Liability Following FHA’s New Certifications

The Mortgage Bankers Association urged lenders to review the Department of Housing and Urban Development’s new loan-level and lender-level certifications to assess the legal and reputation risks to FHA lending. In a statement, MBA President/CEO David Stevens further urged lenders to analyze whether the new certification language provides sufficient protection from unwarranted false claim enforcement action. The MBA statement came as the Department of Justice, commenting on the new certifications, warned that it will continue to pursue lenders that submit false statements and false claims with the intent to defraud taxpayers. The new loan-level certification language reinforces FHA’s position that lenders should not be penalized for minor mistakes on FHA loans. It requires lenders to certify “to what they know to be true to the best of their knowledge.” Lender-level certification, carved out of the initial loan-level certification, would require lenders to certify they have not ...

March 25, 2016 - Inside FHA/VA Lending

FHA Urged to Update Assumption Rules, Discuss Handbook Changes

The Mortgage Bankers Association called upon the FHA to update guidance regarding the assumption of FHA-insured loans and, separately, sought additional clarifications on many outstanding policies in the newly revised Single Family Policy Handbook. In a letter to FHA Commissioner Edward Golding, the MBA strongly urged the FHA to revisit and make changes to its loan-assumption policies and procedures, which have gone unchanged since the mid-1980s. With interest rates expected to rise over the next few years, the MBA anticipates the number of FHA loan-assumption requests to increase as well. Stale assumptions would make it virtually impossible for lenders to recover the actual costs incurred while processing them, warned Pete Mills, senior vice president for residential policy. Loan assumption enables a homebuyer to take on the obligations of the ...

March 25, 2016 - Inside FHA/VA Lending

FHA, VA Appraisals Come in Lower Than Contract Price, Survey Finds

Although appraisals are mostly in line with contract prices, VA and FHA appraisals more often miss the contract price than appraisals for conventional home loans, according to real estate agents’ responses to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. The difference gets no clearer than in California where many FHA and VA appraisals are coming in under the contract price. In contrast, appraisals for conventional mortgage loans are coming in as much as 10 percent higher, said a real estate agent in the Golden State. “FHA and VA appraisals are more conservative than conventional,” respondents observed. There are a number of reasons for FHA and VA appraisals coming in lower than conventionals, industry participants say. Although the appraisal process is the same for both government and conventional mortgage programs, FHA and VA appraisal rules require much closer scrutiny of the property to determine whether certain repairs must be made before it can be sold. In addition, no two appraisers are alike. Some appraisers will not give value to upgrades, such as granite countertops or hardwood floors, while others do.

March 25, 2016 - Inside FHA/VA Lending

Inspector General Voices Concern Over HUD’s Ability to Protect MMIF

Despite efforts by the Department of Housing and Urban Development to prevent or mitigate fraud, waste and abuse in FHA loan programs, concerns remain about HUD’s resolve to take the necessary actions going forward to protect the FHA insurance fund. Testifying recently during a House appropriations hearing, HUD Inspector General David Montoya said HUD is often hesitant to take strong enforcement actions against lenders. Montoya blames HUD’s tentativeness in carrying out competing mandates of continuing FHA’s role in restoring the housing market and ensuring availability of mortgage credit, and continuing lender participation in the FHA program. For example, he said FHA has been slow in starting claims reviews. “The OIG has repeatedly noted in past audits and other types of lender underwriting reviews HUD’s financial exposure when paying claims on ...


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