Private mortgage insurers appeared to gain market share in the third quarter of 2018 as purchase-mortgage lending surged in the agency market, according to an exclusive ranking and analysis by Inside Mortgage Finance. [Includes three data charts]

The Senate Banking, Housing and Urban Affairs Committee next week is expected to push officials from Fannie Mae, Freddie Mac and the Federal Housing Finance Agency on controversial pilot programs that have drawn the ire of certain industry factions.

The reverse mortgage industry is supporting an FHA move to require a second appraisal for certain Home Equity Conversion Mortgage loans. FHA did not seek public comment on the interim policy change, which subjects all HECM loans, effective Oct. 1, to a collateral risk assessment to ensure the appraisal of the property is not inflated. The new policy has wide support in the reverse mortgage industry. A study conducted by the Department of Housing and Urban Development last year found that 37 percent of appraisals on approximately 134,000 HECMs tested positive for over-valuation. The inflated HECM appraisals were at least 3 percent higher than estimates by FHA’s proprietary automated valuation model, according to FHA Commissioner Brian Montgomery. The same study also found that higher-than-expected losses in the HECM program could be attributed in part to ...

Use of FHA downpayment assistance from programs run by entities owned by Native American tribes may soon be under agency scrutiny. Industry stakeholders are pointing to a pre-rule notice the Department of Housing and Urban Development published last spring as an opportunity for HUD to clarify the use of downpayment assistance from parties other than those currently allowed to meet FHA’s 3.5 percent downpayment requirement. In an advanced notice of proposed rulemaking in the Federal Register, HUD is seeking comment on the use of downpayment assistance as well as their approved sources, such as tribal providers, state and local housing finance agencies, government agents and non-profit organizations. One downpayment-assistance provider is the Chenoa Fund Loan Program, which is owned and operated by the Utah Cedar Band of Paiutes. The fund provides secondary financing to ...

The Department of Housing and Urban Development’s failure to record indemnifications under a 2015 settlement agreement exposed the FHA insurance fund to potential losses of more than $47.4 million, according to an internal audit report. HUD’s Office of the Inspector General performed the audit to resolve issues related to two settlement agreements entered into by Fifth Third Bank and the Department of Justice. Fifth Third, a direct endorsement lender, had voluntarily disclosed to HUD 1,439 materially defective FHA loans that were originated between 2003 and 2013. HUD paid claims on 519 of those flawed loans, which generated more than $84.9 million in ineligible claims. In addition, FTB agreed to indemnify HUD for all losses for the remaining 920 FHA-insured mortgage loans. In January 2017, the bank voluntarily disclosed an additional 381 materially defective FHA loans. A HUD review of the ...

FHA Issues Waiver of Property Inspections in Disaster-Stricken California Counties. FHA has issued a waiver of its timing policy for completing property inspections prior to closing or endorsing a loan for FHA insurance. The waiver is in effect in presidentially declared major disaster areas in Lake and Shasta Counties, CA, that were ravaged by wildfires and high winds. FHA believes that the wildfires and high winds have stabilized so as not to cause any further damage to properties, even though FEMA has not declared “all clear” in the affected areas. The waiver allows damage inspections to be completed after Oct. 2, for properties located in the PDMDA. NC Commissioner of Banks Amends State Reverse Mortgage Rules. The North Carolina Commissioner of Banks recently amended its ...

After much anticipation from the mortgage insurance industry, Fannie Mae and Freddie Mac released their updated requirements that private MIs must meet to be eligible to provide mortgage insurance on GSE loans. This is the first time the requirements have been revised since being introduced in 2015.Dubbed PMIERs 2.0, the new private mortgage insurance eligibility requirements will go into effect in March 2019. They serve as a way for Fannie and Freddie to better manage counterparty risks by detailing financial and operational eligibility requirements that private mortgage insurers need to meet, especially as PMIs play a large role in high loan-to-value lending.

Correspondent lenders and mortgage brokers continue to account for an unusually large share of FHA and VA lending, according to a new analysis by Inside FHA/VA Lending. During the first six months of 2018, correspondent-lending programs accounted for 53.3 percent of government-insured mortgage production, according to survey data reported by a broad cross-section of the market. At the same time, correspondent production accounted for 46.4 percent of conventional-conforming lending and a mere 16.1 percent of the non-agency jumbo market. The heavy reliance on agency securitization in both the conventional and government-insured sectors helps explain the higher levels of correspondent production. For many smaller shops, it is more economical to sell production to aggregators than pay the overhead costs of dealing directly with the agencies. In the government-insured sector, some banks are ... [Chart]

Loss rates for notes sold in the Department of Housing and Urban Development’s distressed asset sales program are lower than those for notes that pass through the traditional conveyance claim process, according to HUD’s inspector general. An IG audit found that the DASP loss rate was more than 3 percentage points lower than the loss rate of similar conveyance notes. The IG took into account the losses for actual DASP sales and real estate-owned conveyance claims during the same audit period, the IG said. Ultimately, the DASP program saved the FHA insurance fund more money than the conveyance process, the report concluded. The FHA Office of Housing conducts mortgage loan sales under the Single Family Loan Sale Initiative, and most distressed notes are sold through DASP. The initiative aims to maximize recoveries to the ...

A new Federal Housing Finance Agency inspector general report highlights some potential risks in Freddie Mac’s Integrated Mortgage Insurance, or IMAGIN, program. Although it discusses some of the criticism leveled at the program, the IG report doesn’t take sides.