FHA and VA single-family originations fell in the fourth quarter of 2017 due to a decline in purchase mortgage originations that was offset somewhat by an increase in refinance business. FHA endorsed $237.3 billion in forward single-family mortgages in 2017 notwithstanding an 11.9 percent drop in the fourth quarter. FHA production also dropped 7.1 percent year-over-year. Market observers attributed the decline in FHA originations to high mortgage insurance premiums, stiffer competition from private lenders’ low-downpayment programs, and a more aggressive conventional-conforming mortgage market. A new analysis by Inside Mortgage Finance also found that government-backed lending and the jumbo market saw the biggest production declines from the prior quarter. In particular, IMF’s research found that FHA, VA and U.S. Department of Agriculture rural-housing originations fell ... [Charts]
Analysts are monitoring prepayment speeds to see if Ginnie Mae’s efforts to curb serial refinancing or loan churning are having an impact. Wells Fargo Securities analysts said a conversation about churning has started with a handful of Ginnie mortgage-backed securities issuers, which “should be a net benefit for MBS,” especially for higher coupons where outlier speeds are most prevalent. In a recent alert, the analysts said the momentum continues to build to curb churning of VA loans following notification of lenders suspected of engaging in the activity. Nine issuers have received written warnings based on unusual prepayment rates in VA-backed MBS. Such deviations from market norms for an extended period are not acceptable because they put veterans’ earned benefits at risk, the agency said. The outliers were discovered after a comprehensive review of issuer performance and ...
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