The New York State Department of Financial Services has directed FHA lenders to refrain from applying the FHA’s higher mortgage insurance premiums in calculating a loan’s annual percentage rate and fully indexed rates for 60 days to prevent loans from becoming “high cost” or subprime. At the same time, the department issued guidance to conventional lenders on how to interpret existing provisions in state banking law regarding subprime loans. Statutory changes were made in 2009 to prevent some loans from becoming “subprime,” as defined by state law. Spikes in mortgage interest rates in the past few weeks plus ...
A post-endorsement review of FHA loans during the first quarter of 2013 has revealed a high percentage of materially defective loans.The defects apparently went undetected during the underwriting process and were uncovered only during a loan-level review that the FHA routinely conducts to ensure that newly originated, higher-risk loans comply with agency requirements. The Department of Housing and Urban Development’s Office of Lender Activities and Program Compliance reported that 44 percent of 6,251 single-family mortgage loans that were reviewed in the first ...
The Department of Veterans Affairs has urged holders and servicers of home loans with a VA guaranty to consider principal reduction when evaluating a distressed loan for possible modification. In a recent circular, the VA noted that it is not able to reimburse any principal reduction because a VA claim is payable only upon termination of a loan, and any forgiven amount is no longer part of the borrower’s mortgage debt. However, principal reduction in a loan modification may produce a higher expected return for a servicer than termination of the loan, the VA said. This is especially true when the sum of the ...
The Department of Housing and Urban Development is adopting the mortgage banking industry’s data standards format for the FHA’s TOTAL Mortgage Scorecard, which HUD uses to evaluate the credit risk of FHA loans that are submitted through an automated underwriting system. The standards were developed by the Mortgage Industry Standard Maintenance Organization (MISMO), a nonprofit subsidiary of the Mortgage Bankers Association. MISMO is an open data standards group that promotes consistency among mortgage transaction participants to reduce loan processing costs, increase transparency, and ultimately ...
Industry response to a proposal to consolidate Ginnie Mae I and II mortgage-backed securities programs has been positive overall despite certain investor and issuer concerns, according to Ginnie Mae. In an industry update, Terry Carr, Ginnie Mae’s senior advisor of communications and Congressional relations, explained that meetings with stakeholders over the past three months have been productive. “This concept has been well-received,” she said. Ginnie Mae will soon begin developing a blueprint laying out the mechanics for converting ...
Ginnie Mae guaranteed more than $216.9 billion in mortgage-backed securities during the first half of 2013, up 18.8 percent from the same period last year. Issuance was also up 8.0 percent in the second quarter from the first quarter, according to an Inside FHA Lending analysis of Ginnie Mae data. Not surprisingly, a significant share – $132.8 billion – of Ginnie Mae MBS issuances over the six-month period were backed by FHA loans. VA accounted for $72.1 billion while Rural Housing Service loans totaled $10.5 billion. Ginnie Mae issuances dropped during the first quarter but surged in the second quarter as ... [1 chart]
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