Moody’s Investors Service published a warning this week regarding mortgage programs that use bank statements and letters from accountants to verify borrowers’ income. The rating service said that type of underwriting – especially when relying on fewer than 24 months of statements – yields loans that are more risky than mortgages that have traditional income verification. Bank-statement mortgages have gained some prominence in the non-agency market this year as Lone Star Funds ...
Total FHA and VA originations increased during the first nine months of 2016 compared to the same period last year, although VA was more active, posting a double-digit production increase, according to an analysis of Ginnie Mae data. Lenders delivered $201.0 billion of FHA loans to Ginnie single-family mortgage pools over the last three quarters, up 4.8 percent from the previous year. Approximately 65.4 percent and 29.3 percent of FHA loans securitized were purchase loans and refinances, respectively. The remainder was loan modifications. VA originations totaled $143.2 billion over the same period, up 22.3 percent from last year. Refinances accounted for 51.9 percent of volume and purchase loans comprised 47.0 percent. The share of FHA loans in agency mortgage-backed securities for the nine-month period was 19.5 percent and 13.9 percent for VA. FHA loans accounted for ...
The FHA this week announced higher “floor” and “ceiling” loan limits for forward and reverse mortgages for 2017, pushing loan limits upward in certain metropolitan statistical areas by as much as $162,500. The loan-limit changes will take effect on Jan. 1, spurred by rising median home prices. The Case-Shiller Home Price Index for September reported that home prices increased 5.5 percent year-over-year, driven by a tight supply of homes for sale, especially in the West. Each year, FHA recalculates its loan limits based on 115 percent of the median house price in the area. For counties located in MSAs, the loan limit is calculated based on the highest-cost county within the MSA. Under the 2017 changes, FHA will raise its nationwide “floor,” or low-cost area mortgage limits, for one-unit properties to $275,665 from $271,050, a difference of $4,615. In high-cost areas, the loan-limit ceiling for a ... [ 2 charts ]
Stakeholders voiced support for an FHA proposal to revive the agency’s single-unit approval policy for condominium financing but differed on owner-occupancy requirements. Both items are part of a proposed rule which would give the FHA more wiggle room in formulating its condo rules. The proposed rule’s 60-day comment period ended on Nov. 28. Among other things, the FHA is proposing to reinstate “spot approval” financing on individual units in condo projects that are not currently approved for FHA insurance. The Department of Housing and Urban Development terminated single-unit approvals a few years ago in favor of mandatory condo-project approval. Ultimately, the current approval process proved to be more cumbersome, resulting in many condo projects opting out of FHA. Under the proposed rule, single-unit approvals are limited to a maximum of 20 percent of the units in the ...
A federal jury awarded more than $93 million in damages to the federal government after finding Allied Home Mortgage entities liable for civil mortgage fraud against the FHA. A unanimous jury found Allied Home Mortgage Capital and Allied Home Mortgage Corp., as well as the company’s president and chief executive, Jim C. Hodge. guilty of mortgage fraud. The jury awarded the Department of Housing and Urban Development and the Department of Justice a total of $93 million in damages, including $7.4 million against Hodge. The Allied entities allegedly violated the federal False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) in connection with “a decade of fraudulent misconduct” related to FHA lending. The FCA provides for treble damages and imposes a penalty of $5,500 to $11,000 for each violation. Separately, FIRREA imposes a ...
Since the November election, mortgage rates have spiked roughly 75 basis points, promising to snuff out the refinancing market and possibly leading to a spate of industry layoffs. But so far, it appears that many firms are keeping their cost-cutting powder dry. “Application volume has been pretty much the same,” said Paul Rozo, CEO of nonbank originator Paramount Residential Mortgage Group, Corona, CA. “I think it’s too early in the game to be thinking about layoffs.” Marc Savitt, a principal in The Mortgage Center, a small West Virginia-based brokerage firm, said...
Mortgage lenders and other employers that have made or are preparing to implement changes to comply with the Department of Labor’s revised overtime pay regulations may have to reevaluate whether to hold off or go forward with those plans, according to wage and overtime experts. On Nov. 22, Judge Amos Mazzant of the Eastern District of Texas granted a request by several states to block the new overtime pay rules that would have gone into effect on Dec. 1. The judge issued a preliminary injunction after determining that the DOL did not have the authority to decide whether workers should be paid overtime based on their salary level alone. Mazzant agreed...
Based on current trading values, Fannie common now has a market capitalization rate (share price multiplied by number of shares) of $28.01 billion. Freddie common is valued at $15.14 billion.
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