Fitch Ratings just released its finalized criteria for analyzing loans securing non-agency residential mortgage-backed securities under the qualified mortgage standard and ability-to-repay rule. Fitch said it will require more credit enhancement to loans that do not benefit from the QM safe harbor protection. Second, credit enhancement will be based on pool probability of default, which projects the maximum number of borrower challenges, as Fitch expects borrowers will only make a claim that the lender violated the rule as a defense to foreclosure.

The House Financial Services Committee late last week passed bipartisan legislation that would provide an alternate way of defining “rural” for purposes of the CFPB’s qualified mortgage standard so a bank could make its case to the bureau as to why a jurisdiction should be fit into that category. H.R. 2672 would direct the CFPB to establish an application process under which a person who lives or does business in a state may apply to have an area designated as a rural area for the purpose of exempting certain loans from the CFPB’s ability-to-repay rule if that area has not already been designated as such by the bureau.

How does the Johnson-Crapo bill favor senior preferred shareholders? The language notes that when assets in Fannie and Freddie are eventually sold, the idea is to “maximize the return for the senior preferred share-holders of the enterprises”…

In a 10-K filing, PHH said its mortgage business relies on just two firms for 41 percent of its private-label retail business: Merrill Lynch Home Loans at 29 percent and Morgan Stanley at 12 percent.

Servicers would face annual government certifications and biennial examinations by the new regulator/insurance fund. Minimum operational and management standards would be created for internal controls, recordkeeping, audit systems, and reporting, to name just a few.

For lenders that contribute at least 15 percent of the loans included in an issuance, Fitch said it will conduct an enhanced operational review of the lender’s origination program and underwriting guidelines.

An estimated $272 billion of non-agency jumbos were originated in 2013, accounting for 14.4 percent of total production.

The Department of Housing and Urban Development has completed modifications to its Home Equity Reverse Mortgage Information Technology (HERMIT) system to accommodate new premium structures and initial disbursement limits that were implemented last September. Launched in October 2012, HERMIT is HUD’s online-web-based automated system for monitoring and tracking its Home Equity Conversion Mortgage portfolio, collecting mortgage insurance premiums (MIP) and paying insurance claims. Lenders also access HERMIT to notify HUD of a borrower’s death and the initiation of foreclosure. While HUD had already modified FHA Connection and released an updated version of the HECM calculation software to accommodate the latest modifications, changes to the HERMIT system were delayed until now. HUD instructs FHA lenders to follow the mapping instructions for borrowers’ mandatory obligations in HERMIT to ...

Legislation seeking a recalculation of the Department of Housing and Urban Development’s loan limits for 2014 was introduced this week in the House of Representatives. Authored by Rep. Gary Miller, R-CA, H.R. 4208 (The Stabilizing FHA Loan Limit Calculation Act of 2014), would address credit availability problems caused by the statutory change in the way FHA loan limits are calculated and by revised median housing prices. More than 650 counties throughout the country saw their median house prices drop, some by as much as 20 percent to 50 percent, because of the 2014 calculation. Approximately 93 percent of California’s housing market or 54 counties have experienced severe declines in their FHA loan limits in 2014. For example, in Miller’s Riverside-San-Bernardino-Ontario district, the median price for a one-unit property fell from $500,000 in 2013 to $355,350 in 2014 – a 30 percent difference. In 2013, an estimated 8,000 home sales with ...

The Chinese Year of the Horse welcomed the FHA with a hard kick in the head as total originations fell 20 percent in January from December 2013. Even as rising interest rates slowed refinancing activity last year, the expected increase in purchase-mortgage lending barely materialized and, in fact, appears to be dropping off. Lenders reported $8.7 billion in new originations in January, down from $10.9 billion in December and $23.7 billion from a year ago. Most were fixed-rate mortgages and 77.1 percent were purchase transactions. Three of the top five FHA lenders – Quicken Loans, JPMorgan Chase and LoanDepot – reported purchase origination totals below 40 percent. Top-ranked Wells Fargo and Bank of America each reported 64.0 percent of total FHA originations as purchase transactions. Wells Fargo closed the month with $519.0 million despite a ... [2 charts]