CBO suggests seven options to reduce risk in FHA coverage, including insuring less of the loan amount...

For several months now we’ve been hearing reports that the Trump administration has grave concerns about the FHA program...

Originations of adjustable-rate mortgages increased by 40.5 percent from the first quarter of 2017 to the second, according to a new ranking and analysis by Inside Nonconforming Markets. An estimated $59.0 billion of ARMs were originated in the April-June cycle, with a number of major banks and nonbanks posting solid gains. Chase was...[Includes one data table]

Nonprime lenders defended mortgages underwritten with borrowers’ bank statements after criticism of the loans by Fitch Ratings. Steven Schwalb, CEO of Angel Oak Home Loans, a nonprime lender that offers bank-statement mortgages, noted that the loans measure borrowers’ cash flow more precisely than the tax returns used for traditional income verification. “We’re comfortable with the risk of that borrower,” he added, during a panel discussion at the ABS East conference produced by Information Management Network last week in Miami Beach. Bank-statement mortgages account...

Originations of nonprime mortgages in 2017 are the strongest they have been since the financial crisis but remain well below levels seen before then. Lenders are looking to lean on loan originators and borrowers in an effort to increase volume. Angel Oak Companies is on track to originate more than $1.1 billion of non-qualified mortgages this year, according to the firm. The nonbank has three lending units that largely focus on nonprime mortgages and the $1.1 billion in production will be a company record. “Clearly, investors, brokers and consumers are...

Among the major originators of interest-only mortgages, production trends were decidedly mixed in the first half of this year, according to an analysis by Inside Nonconforming Markets. In a group of 12 lenders, six posted lower IO production compared with the first half of last year while some others boosted production significantly. Overall, the lenders originated $6.81 billion in IOs in the first half of 2017, down 19.9 percent from the same period last year. A fair amount of the decline in IO production was driven...[Includes one data table]

Lenders in the non-agency market are loosening underwriting standards to some extent as refinance activity is expected to decline. Some 22 percent of the lenders surveyed by Fannie Mae said they loosened underwriting standards for non-agency mortgages during the third quarter. And 13 percent said they plan to loosen credit standards in the fourth quarter. Only 3 percent of the non-agency lenders surveyed by Fannie said...

Mortgage lenders sold $49.74 billion of high-cost home loans to a variety of secondary market investors last year, according to a new Inside Nonconforming Markets analysis of Home Mortgage Disclosure Act data released late this week. Sales of high-cost mortgages rose 19.1 percent from 2015 to 2016, and accounted for 3.3 percent of total loans sold last year. HMDA reports are required to flag loans with interest rates that exceed the benchmark prime offered rate – basically the rates for Freddie Mac mortgages – as well as loans that are subject to special consumer protections under the Home Owner Equity Protection Act. Sales of HOEPA loans totaled...[Includes one data table]

Ginnie Mae’s inadequate response to the rapid increase of nonbank issuers may make it difficult for the agency to identify issuer problems in time to prevent default, warned the Department of Housing and Urban Development’s inspector general in a recent audit report. Specifically, the IG report said the agency failed to implement policies and procedures for managing issuers in a timely manner and tried to supervise them without a written default strategy. Furthermore, the report claimed Ginnie did not promptly assess and address the risks posed by nonbanks. Ginnie Mae questioned the findings, contending it “has done a more than credible job adapting to the new environment” despite the pressure on its resources. Ginnie’s issuer base had changed dramatically over the last couple of years as many banks either left or reduced their exposure in the FHA market for fear of being slapped with a ...

The Department of Housing and Urban Development has asked its inspector general for some leeway in making much needed changes to ensure servicers are employing loss mitigation. Responding to an audit, HUD asked the IG to modify some of the recommendations to enable the agency to make policy changes where needed and in a suitable format. HUD also requested that recommendations regarding indemnification and servicing be tweaked so that remedies will be required only when a deficiency is found. The IG audit was based on the result of an analysis, which showed that servicers may not be always evaluating delinquent FHA borrowers for loss mitigation as required and that HUD’s oversight in this area is weak. According to the findings, HUD did not have adequate controls to ensure that servicers of FHA-insured single-family loans properly engaged in ...