This week, for only the first time this year and only the second time in the last decade, the Federal Reserve raised interest rates by 25 basis points, a move widely expected by market participants. What captured more attention was an upward adjustment of the Federal Open Market Committee’s so-called “dot plot,” suggesting that the U.S. central bank anticipates possibly raising rates three times during each of the next three years. Last year at this time, the FOMC raised...

Originations of adjustable-rate mortgages increased by 9.4 percent in the third quarter of 2016, according to a new ranking and analysis by Inside Nonconforming Markets. With an increase to interest rates on mortgages seen this quarter and even higher rates expected, ARMs appear likely to gain market share. An estimated $58.0 billion in ARMs were originated in the third quarter, accounting for 9.9 percent of first-lien originations, according to Inside Mortgage Finance ... [Includes one data chart]

Lenders originating interest-only mortgages showed divergent trends in the third quarter, with some posting significant declines on a quarterly basis while others continued to increase production. A group of 12 lenders tracked by Inside Nonconforming Markets originated a total of $9.64 billion in IOs during the third quarter, down 23.7 percent from the previous quarter. The decline was driven by PHH Mortgage, whose IO originations through three quarters this year ... [Includes one data chart]

Mortgage brokers played a somewhat diminished role in jumbo mortgage originations during the third quarter, according to an exclusive Inside Nonconforming Markets analysis and jumbo lender profile. Survey data from Inside Mortgage Finance show that brokers were responsible for just 3.9 percent of jumbo originations in the third quarter, down from 4.5 percent in the previous period. The retail (79.8 percent) and correspondent (16.3 percent) shares were ... [Includes one data chart]

Royce Goldman, a marketing lead generator, noted that as interest rates rise, the firm can help connect lenders that originate non-qualified mortgages with borrowers. “As private capital and securitization continue to expand under a more favorable regulatory climate, we will continue to see liquidity expansion but it will require a data driven approach to sourcing the client profile this investor community will lend to,” said John Royce, CEO of Royce Goldman.

FHA will no longer perform pre-closing reviews of loans prior to endorsement, according to an agency notice published in the Federal Register this week. Rather, a lender applying for direct endorsement (DE) authority will be required to submit loan files for FHA’s pre-endorsement review only after closing. After determining the mortgage’s eligibility, FHA will notify the lender of the loan’s endorsement. Although the notice’s effective date is Jan. 13, 2017, lenders will be required to submit only closed mortgages for pre-endorsement review on or after April 1, 2017. FHA said it is providing a four-month grace period so that applicants for DE authority will have sufficient time to prepare for the switch. The agency is currently adjusting its systems to accommodate the change. Lenders will be updated periodically about these modifications prior to April 1. Lenders that enter the ...

FHA reverse mortgage lenders capped the third quarter of 2016 with a 2.2 percent volume increase over the previous quarter, ending the first nine months with $11.0 billion in new Home Equity Conversion Mortgage loans. The year-over-year story, however, was different, as nine-month originations fell 10.5 percent from the same period last year. Purchase HECMs comprised the bulk of originations, 86.3 percent. Unlike in FY 2015, when the Mutual Mortgage Insurance Fund’s healthy HECM portfolio helped pushed the capital reserve ratio above the statutory 2.0 percent requirement, the portfolio appeared to be in bad shape in FY 2016. The fiscal 2016 actuarial audit of the MMIF projected a negative $7.7 billion economic value for the HECM program, dramatically down from last year’s estimated $6.8 billion. Auditors attributed the decline to adverse effects of “incorporating deeper ... [Chart]

The flow of rural housing loans into Ginnie Mae securities saw a significant spike in the third quarter of 2016, thanks to increased market activity. Approximately $13.7 billion in USDA loans were delivered into Ginnie Mae single-family pools over a nine-month period, punctuated by a 32.1 percent surge in volume in the third quarter. Production was up a mere 1.2 percent year over year. Top USDA issuer Chase Home Finance accounted for $3.4 billion of securitized rural housing loans while in distant second place, PennyMac closed the quarter with $1.4 billion. Wells Fargo ($951.3 million), Freedom Mortgage ($876.6 million), and Pacific Union ($394.4 million), in sequential order, comprised the rest of the top five USDA issuers. Freedom Mortgage saw its volume increase tenfold both on a quarter-to-quarter and year-over-year ... [Chart]

Housing counselors participating in the Department of Housing and Urban Development’s various programs must be certified to offer counseling services to consumers, according to a final rule issued this week by the agency. In order to become certified, housing counselors must pass a standardized written examination and work for a HUD-approved housing counseling agency (HCA). Applicants must demonstrate proficiency in six areas of housing counseling: financial management, property maintenance, responsibilities of homeownership and tenancy, fair housing laws and requirements, housing affordability, and avoidance of mortgage delinquency, eviction and default. Despite its recent release, the final rule will take full effect three years following the announcement of the certification exam. HUD will offer intensive training and study resources in English and Spanish to ...

The growing popularity of private-label servicing and the way it’s offered to lenders are raising regulatory questions, underscoring the need for guidance and supervision, according to legal experts. With the most comprehensive offerings of private-label servicing, the borrower never knows the subservicer exists, and that’s the point of the arrangement, according to Craig Nazzaro, of counsel at the Atlanta-based law firm Baker Donelson. Nazzaro attributes...