Ginnie Mae has issued a clarification as to when issuers can buy certain loans out of the pool and redefined certain familiar terms used by government agencies in insuring or guaranteeing mortgage loans. The agency’s mortgage-backed securities guide allows issuers to purchase loans out of pools when the borrower has missed three consecutive monthly mortgage payments or is 90 days past due. However, the guide is unclear whether the issuer must wait at least three months before buying a loan out of the pool if the borrower is making at least a partial payment while the loan is in default. Ginnie Mae made clear in a May 16 memo that issuers may purchase a loan from an MBS pool even though it is seriously delinquent. For example, if the last installment payment on a mortgage loan was Dec. 1 and the borrower missed payments in ...

The Department of Veterans Affairs is studying the impact of fees and may propose alternative regulations to amend the current structure, according to agency officials. In a briefing with the National Association of Realtors, VA staff attorney Erica Lewis said the agency has begun looking at the fees VA charges in response to complaints from some lenders. During the briefing, some NAR members expressed concerns that some of the VA loan requirements, such as pest inspections, disadvantage veterans because they may dissuade sellers from accepting offers that could potentially create additional fees, which cannot be paid by the homebuyer. Lewis also suggested that real estate agents request a waiver from the VA field office nearest to the location of the property being purchased to ...

Echoing an assessment that has become all too common across the housing and mortgage markets, CFPB Director Richard Cordray said excessive student loan debt is keeping many young people from buying a house and taking on a mortgage. “The consumers we hear from tell us how their debt burden has stopped them from buying a home, opening a small business, or starting a family,” Cordray said in a speech last week. With student-loan debt now having reached $1.2 trillion, the CFPB estimates that more than 7 million Americans are in default on a student loan. “For those who default early in their lives, the negative consequences for their credit report can make it more difficult to pass employment background checks...

In a pre-emptive strike against Republican critics on Capitol Hill, the CFPB announced last week that it was scrapping its performance-management system that produced some disparate-impact blowback, and was instituting a plan to compensate agency staff estimated to cost upwards of $5 million. The new report digs deeper than the bureau’s 2013 internal report that was released after allegations of discrimination and allegation at the bureau came to light back in March. “[W]e have determined that there were broad-based disparities in the way performance ratings were assigned across our employee base in both 2012 and 2013,” CFPB Director Richard Cordray said in an email to bureau staff. “These differences indicate a systemic disadvantage to various categories of employees that persisted...

The slowdown in VA activity in the last quarter of 2013 spilled over into the first quarter of this year as lenders reported a 13.0 percent decline in loan production during the period, according to an Inside FHA Lending analysis of agency data. The downward trend in volume began at the end of the first quarter last year although VA still considered 2013 a record year for VA originations. VA lenders reported $19.5 billion in total production for the quarter, down from $22.4 billion in the previous quarter. Production, likewise, dropped 47.9 percent this year compared to the same period last year. Despite the slowdown, lenders remain optimistic about the VA market. “We have spent a lot of time understanding the perils of lending to veterans and learning to deal with the losses, and we are all in with VA lending,” said one lender. “When you do VA loans you talk about having ... [1 chart]

The Department of Veterans Affairs said there may be a need for further clarification of its newly issued qualified mortgage (QM) rule to allay lender fear of potential liability if they originate VA streamlined refinances, also known as Interest Rate Reduction Refinance Loans (IRRRL), with a rebuttable presumption. Industry sources say VA lenders remain apprehensive despite assurances by agency officials that little has changed in the VA lending process as a result of the agency’s interim final rule. VA issued its QM document on May 9 in compliance with the Dodd-Frank Act, defining the types of VA loans that are “qualified mortgages” for purposes of the new ability-to-repay (ATR) provisions of the Truth in Lending Act. The Act also imposed similar requirements upon the FHA and the Department of Agriculture for the loans they insure or guarantee. The agency said it issued the rule on ...

Last week, the Republican-controlled House Financial Services Financial Institutions and Consumer Credit Subcommittee considered nearly a dozen pieces of legislation to rein in the CFPB, provide lenders with some regulatory relief, and bring greater transparency and accountability to the agency. Most Democrats on the committee and some consumer advocate groups were either skeptical or outright opposed to the measures, fearing each of the bills would weaken or eviscerate the agency – or result in “death by a thousand paper cuts,” as Rep. Carol Maloney, D-NY, put it. Meanwhile, Republicans and lender groups supported the collection of bills brought before the subcommittee as corrections to a flawed Dodd-Frank Wall Street Reform and Consumer Protection Act that need to be enacted before bad...

Total FHA originations dropped significantly in the first quarter of 2014 as borrower access to credit remained a big problem for the agency, according to Inside FHA Lending’s analysis of agency data. FHA lenders ended the first quarter with a combined $28.3 billion in new originations, down 21.0 percent from the fourth quarter of 2013. Production also fell a whopping 55.6 percent from the same period a year ago. Purchase transactions comprised the bulk of new FHA loans but, so far, the much-anticipated boom in new purchase lending has yet to materialize. The high cost of FHA loans, due mainly to higher mortgage insurance premiums and a requirement to maintain mortgage insurance for the life of the loan, has made it difficult for borrowers to obtain an FHA-insured loan. Lender overlays also have restricted access to FHA credit. The FHA has raised premiums five times since 2009 to ... [1 chart]

Mortgage industry stakeholders are wary of a new FHA proposal to offer mortgage insurance premium reductions to borrowers who agree to complete housing counseling before and after they obtain an FHA-insured mortgage loan. The FHA is seeking comment on a proposed four-year, two-phase housing counseling pilot, “HAWK for New Homebuyers.” HAWK is an acronym for Homeowners Armed With Knowledge, and includes several initiatives aimed at broadening the use of counseling in FHA origination and servicing. HAWK is a component of the “Blueprint for Access,” which FHA announced on May 13 as part of the agency’s efforts to expand access to credit for underserved borrowers. The HAWK pilot would provide FHA pricing incentives to first-time homebuyers who participate in ...

Nonprime lender Citadel Loan Servicing increased its maximum loan size this week to $1.5 million from $1.0 million. Dan Perl, Citadel’s CEO, said the lender is on track to close $14 million in originations in May and $15 million in June. He added that Citadel is close to entering the non-agency mortgage-backed security market. Walter Investment Management revived Ditech Mortgage and the lender will offer jumbos, among other products ... [Includes four briefs]