But isn’t the job of a conservator to preserve assets? If CRT deals are bad financially for Fannie and Freddie, isn’t it time to pull the plug on them?...

Originations of adjustable-rate mortgages increased in 2016 but didn’t keep pace with the overall growth in mortgage originations during the year, according to a new ranking and analysis by Inside Nonconforming Markets. An estimated $212.0 billion in ARMs were originated last year, up 6.5 percent from 2015. ARMs accounted for 10.3 percent of total originations in 2016, down from an 11.5 percent share the previous year. ARM originations also declined ... [Includes one data chart]

A U.S. bankruptcy fudge slapped Bank of America with $45.0 million in punitive damages last week for its handling of a mortgage foreclosure. “Franz Kafka lives,” Judge Christopher Klein wrote in his opinion, citing the author known for writing about complex or illogical situations. “This case reveals that he works at Bank of America.” The lawsuit, Sundquist v. BofA, centers on a jumbo mortgage originated in 2008 by a broker and acquired by Countrywide Home Loans ...

FHA-insured jumbo lending fell slightly in the fourth quarter of 2016 although year-over-year results were a lot better. Production of conforming-jumbo purchase and refinance loans insured by the FHA slipped 0.9 percent in the fourth quarter, a slight bump on the way to an annual jumbo origination total of $26.9billion. Year-over-year, FHA jumbo production was up 5.6 percent from 2015. Conforming-jumbo loans represented 9.8 percent of FHA loans securitized last year, according to data compiled by affiliated newsletter Inside Mortgage Finance. Purchase mortgages comprised 64.9 percent of jumbo loans insured by FHA in 2016 and 98.7 percent were fixed-rate loans. Nonbanks comprised the top five FHA jumbo lenders. Wells Fargo, which closed the year with $423.8 million in FHA jumbo originations, was in sixth place. Quicken Loans led the field with $802.5 million of ... [ Charts ]

The Department of Veterans Affairs and mortgage industry stakeholders are working to resolve the churning problem in the VA Home Loan Guaranty program. It appears the agency is unhappy that Ginnie Mae’s recent pooling policy change was only partially effective in discouraging early solicitation of VA purchase loans for refinancing. Apparently, the practice is continuing and is adversely affecting mortgage-backed securities investors who are not getting full return on their investments. The Mortgage Bankers Association said a handful of lenders and mortgage brokers are still engaging in serial refinancing of VA purchase loans within six months of closing, causing faster prepayments in Ginnie MBS pools. Ginnie announced a policy change, which took effect on Feb. 1, 2017, clarifying that streamline refinance loans may be delivered into Ginnie MBS pools only if, at the ...

More than 11 percent of FHA servicing outstanding was delinquent in 2016, mostly in the 30-60 day categories, with banks dominating the FHA servicing market. An estimated 7.77 million FHA loans are currently being serviced, of which 6.93 percent were 30 to 60 days behind on their monthly payments at the end of last year, according to an Inside FHA/VA Lending analysis of FHA servicing data. Seriously delinquent loans (90-days plus overdue) accounted for 4.90 percent of all FHA loans outstanding. FHA delinquencies spiked in the fourth quarter of 2016, primarily in the 30-day category, which increased 55 basis points over the period. On the other hand, overall FHA delinquencies remained flat year-over-year. Banks comprised four of the top five FHA servicers. They are, in sequential order, Wells Fargo, JPMorgan Chase, Cenlar FSB, and US Bank. PennyMac, in fifth place, is the ... [Charts ]

The Mortgage Bankers Association is urging Housing and Urban Development Secretary Ben Carson to rescind current guidance and prohibit future FHA financing of properties encumbered by a Property Assessed Clean Energy (PACE) tax lien. The guidance, which the Department of Housing and Urban Development implemented in July last year, should be eliminated unless the PACE lien is clearly subordinated to the FHA loan and national, standardized consumer protections are in place, the MBA said. The MBA said it has significant concerns with the risk posed by PACE financing to traditional lien priority and the FHA, as well as the lack of consumer protections. “Unfortunately, [current PACE guidance] does not reduce these concerns – it amplifies them,” the letter warned. PACE loans were developed to help finance energy-efficient retrofits, such as solar panels, energy-saving appliances and ...

The FHA will implement its new Loan Review System that features a defect taxonomy on May 15, 2017. The new system is designed to reduce potential lender liability when FHA loans go into default. The LRS will be used to manage FHA single-family loan and monitoring reviews as well as lender self-reporting of fraud, misrepresentation and other material findings. A change in the pre-endorsement loan review period from pre-closing to post-closing will also become effective on May 15. Scrutinizing loans after they close prior to endorsement for FHA insurance would ensure that loans have no material defects or material errors that could expose the lender to enforcement action or false-claim litigation and the likelihood of a hefty settlement. The defect taxonomy will help lenders identify and classify loan-level defects uncovered through individual loan reviews. Material loan defects have been narrowed down to ...

The FHA’s mortgage insurance premium freeze will have the hardest impact in markets with high shares of FHA-insured mortgage loans, according to a new analysis by the National Association of Realtors. The top 10 markets in which FHA dominates are in Texas and California along with wide swaths of the Southeast and Rust Belt states. FHA comprises more than 40 percent of home-purchase mortgages originated in the aforementioned markets, which would benefit significantly from the 25 percent MIP reduction announced by former Housing and Urban Development Secretary Julian Castro on Jan. 9 this year. Shortly after taking office, the new Trump administration froze a number of new policies issued during the waning days of the Obama administration, including the 25 bps MIP reduction. During his Senate confirmation hearing, HUD Secretary Ben Carson said he would set aside the ...

The USDA Rural Development has issued guidance instructing approved lenders to continue using the two-tiered income limit pilot for the agency’s Section 502 single-family housing programs. Launched in June last year, the pilot bands together the income limits of households with one to four members and with 5-8 members. The USDA banding process significantly increases the number of rural households that are eligible for Rural Development’s direct home loan program and the Home Repair Loan and Grant Program, the agency said. The pilot is based on the Department of Housing and Urban Development’s one-to-eight person income limits, which the department releases every year. Until last year, the USDA had been using the HUD income limits for its single- and multifamily housing programs, with the exception of the USDA’s “hold harmless” clause and the moderate-income banding allowed in the ...