The Department of Housing and Urban Development is planning to conduct an inventory of occupants of homes with a Home Equity Conversion Mortgage loan originated prior to 2014 to help protect non-borrowing spouses from eviction in the event of the HECM borrower’s death. The status of non-borrowing spouses (NBS) remains an issue with HUD relative to HECM books of business predating 2014, when the program did not provide protections to spouses of deceased HECM borrowers, FHA Commissioner Brian Montgomery said during a press briefing this week. Prior to August 2014, only borrowers over the age of 62 could be on the HECM note and on the title of the home. The policy created a problem for non-borrowing spouses, who could face eviction if the older spouse passed away. The HECM borrower’s death is deemed a “maturity event” that renders the loan due and payable. This meant that the ...

The Department of Housing and Urban Development will auction approximately $230 million worth of multiple residential reverse-mortgage pools to qualified bidders next month. An estimated 1,150 due and payable reverse mortgages will be sold to the highest bidders. The loans are first liens secured by single-family, vacant residential properties, where all borrowers are deceased. No borrower is survived by a non-borrowing spouse. The loans will be sold without FHA insurance and with servicing released. The loans are expected to be offered in regional pools, with qualified nonprofits or units of local government entities as first-priority bidders. They will also bid on up to 10 percent of the loans in a larger regional pool. The open, competitive whole-loan sale will be held on Dec. 12, 2018. Qualified bidders will be required to submit a deposit with their bid. HUD will evaluate each bid and determine the ...

The Department of Veterans Affairs has issued guidance clarifying the effect of guaranteed claim payments on a veteran’s home-loan entitlement. According to the guidance, a veteran loses a part or all of his VA home-loan benefit when the agency pays a claim on a loan terminated by a foreclosure, short sale or deed-in-lieu of foreclosure. For VA loans originated on or after Jan. 1, 1990, the VA will no longer establish debts against veterans after it pays a claim to reimburse a servicer for its loss. Reimbursement could be up to the maximum guaranty amount. On the other hand, the agency may establish a debt against the veteran and pursue collection if the loan was originated prior to Jan. 1, 1990. If the veteran wants to reuse the VA home-loan benefit, he or she must fully reimburse VA for its losses in order to restore full entitlement. The loss only affects the veteran’s entitlement under the VA Home Loan guaranty program and ...

FHA to Automate Its User Identification Assignment Process. The FHA Connection (FHAC) system has automated its Application Coordinator User ID assignment process. As of Nov. 9, FHA no longer mails paper documentation to a mortgagee’s chief executive officer when a new user ID has been assigned to one of its employees. Notifications will be emailed to the mortgagee’s administrative contact assigned in FHA’s Lender Electronic Assessment portal system. The contact should verify the information in the LEAP system before Nov. 9 and update it as needed. Also beginning Nov. 9, FHA will discontinue mailing to approved appraisers paper-based notifications of the issuance of FHAC user IDs. Notices will be sent by email to the appraisers’ email addresses, which are on file in FHAC. HUD Announces Disaster Assistance for CA Wildfire Victims. The Department of Housing and Urban Development said ...

Real estate investment trusts boosted their holdings of residential MBS during the third quarter, a period when two firms were acquired by larger players. [Includes one data chart.]

Increasingly worried about withering loan production and declining profitability of the mortgage industry at large, Ginnie Mae recently sent a letter to its 14 largest nonbank counterparties, asking them to develop strategies to right-size their operations.

Tax cuts signed into law at the end of 2017 prompted Ellington Financial to make plans to convert from a partnership to a real estate investment trust. The maneuver will require the company to sell some holdings that don’t meet REIT asset requirements, including collateralized loan obligations and investments in foreign MBS.

The Structured Finance Industry Group has welcomed a recent court ruling that allows ABS investors to intervene in a case brought by the Consumer Financial Protection Bureau that aimed to hold securitization trusts liable for violations committed by servicers.

The average daily trading volume in agency MBS increased to $222.7 billion in October, the best reading since June, according to figures compiled by the Securities Industry and Financial Markets Association.

An involuntary bankruptcy of a $630.2 million collateralized debt obligation was dismissed late last week, prompting praise from the Structured Finance Industry Group. Investors in senior tranches of the CDO had sought the bankruptcy, which SFIG warned would have yielded negative consequences for the securitization industry.