While originating loans that do not meet qualified-mortgage standards does pose litigation risk, many of the lenders willing to offer the loans to prime borrowers have established underwriting standards that minimize the risks while participating in a sector with less competition than the agency market. Mitch Hochberg, general counsel at Ethos Lending and a partner at Fenway Summer, estimated that non-QMs would account for at least 12.5 percent of originations in 2014, assuming a ...

The Senate Committee on Banking, Housing and Urban Affairs is primed to resume its markup next week of legislation to reform the government-sponsored enterprises. While it remains unlikely that Congress will pass GSE reform legislation this year, industry participants of all sorts are working to change portions of the Senate bill. The markup last week was tabled after brief opening statements from Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, who are trying to ...

In April, William Erbey, chairman of Ocwen Financial, claimed that servicing sales to nonbanks had essentially stopped due to an investigation launched in February by the New York Department of Financial Services. “Nothing is really being put out for bid right now,” Erbey said during the earnings call for Home Loan Servicing Solutions, where he is also chairman. However, major nonbank servicers expect that the slowdown is temporary, with significant transfers likely to resume ...

Holdings of home-equity loans by banks and thrifts continued to decline at the end of 2013, according to a new ranking and analysis by Inside Nonconforming Markets. However, HEL originations are starting to increase as home prices have recovered in recent years. Banks and thrifts held $1.02 trillion in closed-end second liens, home-equity lines of credit and HELOC commitments at the end of the fourth quarter of 2013. The holdings declined by ... [Includes one data chart]

Radian Group announced this week that it plans to acquire Clayton Holdings for $305 million. Among other services, Clayton provides due diligence on non-agency mortgage-backed securities. Radian said the transaction is expected to close this summer and the firm expects to break even on the purchase this year. Radian said Clayton will continue to serve its existing clients, grow in its current operations areas and explore opportunities to market new ... [Includes eight briefs]

The Department of Veterans Affairs has issued an interim final rule establishing that almost all VA loans that meet current agency underwriting standards will be “safe harbor” qualified mortgages. Certain VA streamlined refinancing will be “rebuttable presumption” QMs instead. Specifically, under the VA rule, safe harbor QMs include all purchase-money mortgage loans and refinances other than certain Interest Rate Reduction Refinance Loans (IRRRLs) guaranteed by the VA. Such a designation would help assure veterans they can still obtain mortgage loans on favorable terms while easing lenders’ fear of liability if they originate VA loans as well as investors’ concern about putting their money in VA loans, the agency said. In addition, the interim final rule confers QM safe harbor status to all VA direct loans, Native American direct loans and vendee loans. The VA QM rule complies with ...

The Department of Veterans Affairs will soon begin looking closely at whether lenders are complying with the agency’s requirement for a quality control plan. Participants at a recent VA lender conference in Houston said officials warned of impending audits of lenders’ quality control regimes as the agency tightens its oversight. All lenders authorized to process VA loans automatically are required to maintain a QC plan and execute it in the course of making VA loans. Lenders were advised to familiarize themselves with VA’s QC plan requirements and be ready when VA scrutinizes the process in future lender-monitoring audits, participants said. This initiative is consistent with VA auditing an increasing percentage of loans to refine its ...

The Department of Housing and Urban Development will soon seek comment on a proposal to extend equal protection to reverse mortgage borrowers and their non-borrowing spouses from displacement due to eviction or foreclosure. The proposed rule would codify the changes to existing Home Equity Conversion Mortgage regulations and make other alternative revisions as appropriate, according to HUD. The FHA expects to publish a notice of proposed rulemaking soon. Currently, the National Housing Act provides for a “safeguard to prevent displacement of the homeowner.” The provision defers repayment of the HECM until the homeowner’s death, the sale of the home, or the occurrence of other events specified in the regulations. Such events include the homeowner’s failure to reside in the property or failure to pay the required taxes and insurance. Without this provision, a reverse mortgage is ...

The House Appropriations Committee this week approved the FY 2015 Transportation, Housing and Urban Development funding bill, which, among other, things contains a provision prohibiting federal housing agencies from facilitating the use of eminent domain in resolving foreclosure problems. Specifically, the FHA, Ginnie Mae and the Department of Housing and Urban Development would not be allowed to use funds appropriated by Congress to “insure, securitize or establish a federal guarantee” of any mortgage or mortgage-backed security that refinances or replaces a mortgage that has been subject to eminent domain condemnation or seizure by a state, municipality or any other political subdivision of a state. In addition, the bill would prohibit the use of appropriated funds or any receipts or amounts collected under any FHA program to implement the FHA’s new Homeowners Armed with Knowledge (HAWK) program. HUD has proposed to ...

Issuance of mortgage bonds with a Ginnie Mae guarantee fell during the first three months of 2013 as higher FHA costs and all-cash home sales appeared to drive the decline, according to Inside FHA Lending’s analysis of agency data. Ginnie Mae issuers closed the first quarter with MBS issuances totaling $58.2 billion, down 19.0 percent from the fourth quarter of 2013. The drop was steeper on a year-over-year basis, 41.3 percent, data showed. FHA accounted for $30.6 billion of government-backed mortgage securities issued during the period, while VA and Rural Housing Development (Department of Agriculture) accounted for $19.1 billion and $4.1 billion, respectively. Top Ginnie Mae issuer Wells Fargo closed out the first quarter with $12.5 billion, down 28.1 percent from the previous quarter and off 59.9 percent from the same period a year ago. Wells’ volume accounted for ... [1 chart]