As one former GSE stock analyst told us: “There’s no way they can be privatized. To maintain an AAA rating they would need 25 percent (I’m guessing) capital to assets. Even at 5 percent there is not enough spread to earn a market return on capital.”
Mortgage default rates appeared to spike higher in the fourth quarter of 2016, according to a new analysis and servicer ranking by Inside FHA/VA Lending. Some 5.51 percent of FHA loans in Ginnie Mae mortgage-backed securities pools were reported as 30- to 60-days past due at the end of December. That was up 80 basis points from the previous quarter and was easily the highest default rate in the past three years. FHA default rates were also up in more serious delinquency categories: loans 60- to 90-days past due and those over 90-days late. The figures are based on loan count and are not seasonally adjusted. Similar trends occurred in the VA home loan guaranty program. The 30-60 category was up 41 bps, while 90+ delinquencies jumped 19 bps. The supply of Ginnie single-family MBS outstanding continued to set new records. The total, not including multifamily and FHA home-equity conversion ... [4 charts]
VA originations have been trending upward over several quarters, thanks to an unusually heavy share of refinance business, but all good things, at some point, must slow down, lenders say. The refinance business overall has fallen to 45 percent from 55 percent in the fourth quarter of 2016, and that will have an effect on VA originations in the first quarter of 2017, said Andy May, chief operating officer of the American Armed Forces Mutual Aid Association Mortgage Division. Going forward, May expects VA originations to fall by 10 percent in the first quarter due to rising interest rates. But even though rates have been trending up, May saw an uptick in VA loan applications in January as fence-sitters jumped into the market to take out a loan before rates went any higher. “The MBA estimates rates will rise above 5 percent in the next 24 months and then down to 4.8 percent by the end of 2018, and up to 5.3 percent at the ...
The Department of Housing and Urban Development has codified significant changes to the Home Equity Conversion Mortgage program that have reduced risks to both FHA and reverse mortgage borrowers. Specifically, the rule codifies existing HECM policies implemented by mortgagee letters, implements statutory changes, issues new origination and servicing policies, and clarifies existing regulatory language. HUD said it has established an eight-month lead time between the publication of the final rule and the effective date, Sept. 19, 2017, to provide lenders enough time to understand the rule and plan for necessary changes. The grace period also allows time for FHA to issue guidance and make system changes. The National Reverse Mortgage Lenders Association expressed support for the final rule. “Personally, I am glad to see this final rule get out the door,” said NRMLA President and ...
Effective Feb. 13, 2017, VA lenders will be required to submit prior-approval mortgage loans electronically through the WebLGY system to improve the prior-approval process. Currently, lenders mail their prior-loan approval packages to the regional loan center that has jurisdiction over loan underwriting – a tedious, time-consuming process. Electronic submission will help speed things up, the VA indicated. Lenders must follow the guidelines for prior approval and stacking order in the VA’s Lender Handbook. In addition, lenders must furnish a cover letter with the uploaded package stating the reasons for the prior approval and explaining any unique circumstances. The cover letter also must include the submitting underwriter’s name, phone number and email address as well as contact information for the underwriter’s manager. The lender must ensure that the file contains the correct and complete ...
The nation’s largest banks revealed better-than-expected residential origination figures (for some) and mouth-watering markups on the value of their servicing portfolios. That’s the good news. But it wasn’t all wine and roses. On the servicing front, BOK Financial revealed that fourth quarter income was reduced by $17.4 million because it left servicing-related hedges on the books for too long, betting that rates would stay low for an extended period of time. PNC Bank saw...[Includes one data table]
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