Determining a borrower’s ability to repay a bank-statement mortgage is more complicated than evaluating a borrower underwritten with full income documentation, according to a recent report by Moody’s Investors Service. The rating service noted that originations of bank-statement loans tend to be non-qualified mortgages for self-employed borrowers. “The quality of loans originated through bank-statement income documentation programs depends heavily on ...

Major servicers participating in the non-agency portion of the Home Affordable Modification Program have improperly ended mods for a number of borrowers, according to data from the Treasury Department. The Special Inspector General for the Troubled Asset Relief Program is urging the Treasury to take actions to prevent servicers from terminating mods that meet HAMP guidelines. “Treasury’s findings in its on-site visits to the largest seven mortgage servicers in HAMP over ...

One of those GSE watchers is Bose George of Keefe, Bruyette & Woods, who told us: “I see no reason for the administration to negotiate in any meaningful way with the plaintiffs..."

Holdings of subprime and Alt A mortgages by Fannie Mae and Freddie Mac continue to decline, though there’s a sharp divergence in terms of the government-sponsored enterprises’ guarantees of nonprime loans and mortgage-backed securities. The GSEs were exposed to a combined $147.34 billion in purchased/guaranteed nonprime mortgages as of the end of 2015, according to an analysis by Inside Nonconforming Markets ... [Includes one data chart]

An appeals court in Massachusetts recently ruled in favor of a borrower in a case involving the determination of the borrower’s ability to repay a balloon mortgage, setting a concerning precedent, according to industry lawyers. Moronta v. Nationstar Mortgage involves a refinance originated by Fremont Investment & Loan in January 2007 for a borrower in Quincy, MA. The refi included a first-lien 3/1 adjustable-rate mortgage that amortized over 50 years with a ...

The Consumer Financial Protection Bureau last week published its policy for issuing no-action letters for certain innovative financial products. Lenders had called for the policy but industry analysts caution that no-action letters from the CFPB won’t necessarily be helpful. Under the policy, lenders can apply for a no-action letter from the CFPB. The regulator said it will review applications for such letters and in certain circumstances indicate that ... [Includes three briefs]

The FHA in 2015 posted significant shares overall among insured loans, except in purchase mortgages where private mortgage insurance enjoyed a slight edge over government-insured products, according to an Inside FHA/VA Lending analysis of agency loan-level mortgage-backed securities. The FHA accounted for the bulk of insured loans in mortgage-backed securities issued last year, writing coverage on an estimated $236.3 billion in mortgage originations, or 38.8 percent of all insured mortgage loans in 2015. Approximately $608.8 billion in securitized mortgages received...[Includes one data table]

Delivery of FHA loans into Ginnie Mae pools declined 21.6 percent in the fourth quarter from the previous quarter, with correspondents accounting for the bulk of FHA loans securitized during the period, according to an Inside FHA/VA Lending analysis of Ginnie Mae data. FHA loans securitized in Ginnie mortgage-backed securities totaled $57.8 billion in the fourth quarter. Approximately $40.6 billion were purchase loans, down 20.6 percent from the previous quarter. MBS backed by FHA refinance loans totaled $17.2 billion, down 23.9 percent from the prior quarter. Correspondents and retail lenders accounted...[Includes two data tables]

There will be no further reductions of the FHA annual mortgage insurance premium or any change in the agency’s life-of-loan pricing, according to the Department of Housing and Urban Development’s top officials.Testifying recently before a House Financial Services subcommittee, FHA Commissioner Edward Golding attributed a 27 percent increase in FHA purchase endorsements last year to a 50 basis point MIP reduction and continued low interest rates. Although he did not provide any updated guidance on MIP adjustments, Golding assured...

The House of Representatives has passed legislation with provisions that would eliminate the cap on VA loan-guaranty limits and create a new office that would manage certain veteran benefits programs, including home-loan guarantees. The bill, H.R. 3016, The Veterans Employment, Education, and Health Care Improvement Act, passed by voice vote and was referred to the Senate for action. It contains...