Origination of interest-only mortgages declined in 2014 after the rule took effect that made them ineligible for qualified-mortgage status, but the product is far from dead and could see a rebound in 2015. A group of 15 lenders originated a total of $21.59 billion in IOs through three quarters in 2014, according to a new Inside Nonconforming Markets analysis and ranking. That was down 28.0 percent from the same period in 2013. IO lending slowed ... [Includes one data chart]

Industry attorneys warn that documenting borrowers’ income for compliance with ability-to-repay standards established by the Consumer Financial Protection Bureau can prompt fair lending liability issues. During a webinar hosted by Inside Mortgage Finance Publications last week, R. Colgate Selden, counsel at the law firm of Alston & Bird, said there are a number of fair lending issues surrounding income documentation and determining debt-to-income ratio calculations ...

FHA originations are expected to decline modestly in 2015 unless the agency gives in to industry pressure to lower mortgage insurance premiums and lenders ease up on their overlays, according to analysts. Analysts anticipate no meaningful decline in FHA market share next year but do expect some drop as private mortgage insurance become more competitive, especially among borrowers with 720+ FICO scores. Overall, analysts expect 2015 to be slightly better than 2014 because of increased purchase-mortgage lending, which is partly offset by lower refinance activity. Mortgage volumes should climb to $1.18 trillion in 2015, some say. At Keefe, Bruyette & Woods, analysts Bose George and Chas Tyson predict private MIs will take more market share from the FHA in 2015. They do not expect meaningful policy changes from the FHA this year. For example, FHA has given ...

Congress denied funding for an enhanced FHA housing counseling initiative for first-time homebuyers and rejected a request for authority to collect a new FHA fee to enhance quality-assurance reviews. President Obama this week signed the FY 2015 Consolidated and Further Continuing Appropriations Act, a comprehensive package of 11 funding bills for federal agencies. The bill does not include the provisions the FHA had sought to toughen enforcement and help lower costs for first-home purchases. The House passed the $1.1 trillion omnibus spending bill, H.R. 83, by a vote of 219-to-206 on Dec. 11, narrowly avoiding a government shutdown. The Senate approved the bill on Dec. 13. The bill allocates $47 million to the Department of Housing and Urban Development’s housing counseling program and $50 million for foreclosure mitigation counseling. It also provides $400 billion in ...

The Department of Veterans Affairs announced new, lower loan limits for 2015 after Congress decided not to extend the agency’s current maximum lending limits beyond 2014. The current limits will expire on Dec. 31. Under new guidelines, the maximum guaranty amounts for VA loan limits in 2015 will match the lower conforming loan limits established by the Federal Housing Finance Agency for the government-sponsored enterprises next year. These limits range from $417,000 to $625,500, depending on where the borrower is located. VA’s loan limits are tied to the county-based limits established for conforming loans backed by Freddie Mac. Freddie’s loan limits are calculated based on median house prices in counties across the nation. In recent years, VA’s high-cost loan limits have exceeded Freddie’s due to statutory authority granted under the Housing and Economic Recovery Act of 2008. The VA authority was ...

The Department of Agriculture’s Rural Housing Service (RHS) has issued a final rule implementing a new statutory definition of “rural” or “rural area” that could mean increased origination of rural home loans with a USDA guarantee. The Agricultural Act of 2014, also known as the 2014 Farm Bill, mandated the change. Being a statutory requirement, no public comment was sought for the final rule. According to the statute, an area that has a population of more than 10,000 but not exceeding 35,000, and is rural in character and seriously lacks mortgage credit is a “rural area.” The new definition applies to areas deemed rural before Oct. 1, 1990, and later determined not to be rural after the 1990, 2000 or 2010 census and any area deemed rural anytime between Jan. 1, 2000, and Dec. 31, 2010. They will retain eligibility until the receipt of the ...

Production of FHA-insured jumbo loans ballooned in the third quarter of 2014 reflecting heightened activity in this loan segment during the period. A 23.7 percent quarter-over-quarter surge helped push FHA jumbo lenders’ total volume to $7.71 billion at the end of the nine-month period ending Sept. 30. It was a significant increase for a segment that represents only a sliver of FHA’s overall business. However, compared to last year’s first nine months, volume was down by almost half (48.8 percent) as lenders struggled to keep pace with last year’s output. Strong purchase demand helped drive FHA jumbo originations (all FHA loans over $417,000 up to $625,500 in high-cost areas), as purchase mortgages accounted for 81.1 percent of all FHA jumbos originated during the first nine months of the year. Fixed-rates comprised 86.4 percent of FHA jumbos originated during ... [1 chart]

The Mortgage Bankers Association this week declined to participate in a panel discussion on FHA hosted by the American Enterprise Institute because the trade group did not believe the discussion would be balanced and though it would favor only a certain point of view. The topic was “FHA from 1934 to 1938: Lessons for Wealth Building,” with Ed Pinto, a resident fellow at AEI, and Dave Stevens, MBA president, as presenters. Stevens, however, decided to pull out of the event when he saw the format. In a letter to the AEI organizers, Stevens said he agreed to be a presenter thinking the debate “would be a balanced approach.” “When I first agreed to do this, I did not expect that the format would be 45 minutes of [Ed Pinto] and then no more than 12 minutes for me to respond,” he wrote. “That’s an extremely lopsided approach that did not appear to be ...

Proposed Data Collection for Evaluating Impact of Pre-Purchase Homeownership Counseling. The Department of Housing and Urban Development has asked the Office of Management and Budget to clear a proposal to collect information for a national study that would gauge the effectiveness of pre-purchase homeownership counseling. Rather than individual telephone interviews, the study plans to conduct focus groups and to collect data regarding the characteristics and performance of participants’ mortgage loans, even after the end of the study. The information collection will involve an estimated 6,000 borrower-participants, 1,800 co-borrowers, 64 counseling organizations and three FHA lenders. The study will be conducted in three cities at a cost of approximately $521,830. The proposal will be published in the ...

On the supply side, there were $5.63 trillion of single-family MBS guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae outstanding at the end of September.