Legislation was introduced this week to repeal the FHA’s life-of-loan requirement and reinstate a previous policy of requiring borrowers to pay premiums until the outstanding principal balance reaches 78 percent of the original home value. Rep. Maxine Waters, D-CA, ranking member of the House Financial Services Committee, introduced the Making FHA More Affordable Act so that families would not have to keep paying mortgage insurance premiums for the life of their FHA-insured loan. Up until June 3, 2013, FHA was aligned with the private mortgage insurance industry in charging premiums only until the outstanding principal balance reached 78 percent of the original home value. The FHA first announced its intention to require life-of-loan premium payments in January 2013, allowing the agency to collect more premium revenue to bolster its ailing Mutual Mortgage Insurance Fund. FHA’s life-of-loan policy ...

CoreLogic to Provide Solutions to Cut FHA, MMIF Losses. The Department of Housing and Urban Development has chosen CoreLogic to provide valuation and workflow solutions to mitigate losses to the FHA and the Mutual Mortgage Insurance Fund. Under an agreement with HUD, CoreLogic will provide support to determine the best strategies and plans for the valuation and disposition of distressed and real estate-owned properties in HUD’s inventory. Individual Condominium Loan Processing in the VA’s WebLGY System. The Department of Veterans Affairs has issued guidelines to address issues that have arisen since making changes to its web-based loan guaranty system, WebLGY, earlier this month in regards to condominium identification. System changes included removal of the fields where users would input condo IDs when ordering a VA loan identification number (LINs)/appraisal ...

Private mortgage insurers are winning purchase-mortgage business away from the FHA, and VA lending is also gaining ground, according to an analysis of agency mortgage-backed securities data by Inside Mortgage Trends. Lenders delivered $50.25 billion of purchase loans with private MI coverage into agency MBS during the third quarter of 2017. That represented 40.2 percent of total insured purchase loans securitized by the agencies, up from 39.3 percent ... [Includes one data chart]

Arch Capital Group is set to issue a mortgage-insurance linked note transaction. Unlike two other re-insurance deals from a similar shelf, Bellemeade Re 2017-1 received credit ratings, expanding the investor base for the transaction. A mezzanine tranche of the deal received preliminary BBB ratings from Morningstar Credit Rat-ings this week. Mortgages delivered to the government-sponsored enterprises with an unpaid principal balance of $29.30 billion are included in the transaction ...

Department of Housing and Urban Development Secretary Ben Carson indicated he is open to the idea of moving the Home Equity Conversion Mortgage program out of the FHA Mutual Mortgage Insurance Fund to stem future losses. Testifying before the House Financial Services Committee this week, Carson said the changes the department has made recently, as well as those currently under consideration, will eliminate most of the program’s problems although residual issues may still linger. Carson acknowledged that the HECM program’s default rate has been a drain on the MMI Fund even though it is much smaller than the FHA’s forward loan portfolio. The recently revised HECM rules issued on Sept. 19 have “stopped the bleeding” in terms of new reverse mortgages, he added. However, separating the HECM portfolio from the FHA insurance fund and making it a stand-alone program is ...

An estimated 9.8 percent of Ginnie Mae’s business may be potentially at risk due to hurricanes Harvey, Irma and Maria, according to data released recently by the agency. The data represent the number of Ginnie loans and their unpaid principal balance amounts in presidentially declared disaster areas in Texas, Florida, Georgia, Puerto Rico and the U.S. Virgin Islands. A total of 1.07 million mortgage loans with an unpaid principal balance of $184.5 billion have been affected. Ginnie Mae’s current mortgage-backed securities portfolio totals $1.9 trillion. The data only refer to the geographic locations of all affected properties underlying loans in Ginnie MBS pools and do not indicate the percentage of those that may have sustained damage during a storm. Hurricane Irma had the highest share of affected loans, 6 percent, while Harvey and Maria accounted for 3 percent and 1 percent, respectively. Irma caused the ...

The FHA has updated its guidelines for Home Equity Conversion Mortgage for Purchase (H4P) loans to allow lenders to accept loan applications from borrowers without requiring a certificate of occupancy, as well as prior to completion of HECM counseling. The change follows the Sept. 19 effective date of the HECM final rule, which the Department of Housing and Urban Development released earlier this year. The final rule codifies the many policies that are now in place for originating and servicing reverse mortgages, including H4P requirements. According to the revised guideline, an FHA lender may take an initial HECM loan application either prior to or after the completion of HECM counseling. Also, previously, H4P properties were eligible for FHA insurance only when construction was completed and when the local jurisdiction issued a certificate of occupancy or its equivalent, confirming the ...

The Department of Housing and Urban Development has requested its inspector general to reconsider certain recommendations intended to toughen safety standards for drinking water in FHA-insured properties. Other lenders or appraisers could interpret imposing stringent requirements on a few FHA lenders wrongly, which could lead to unnecessary water testing simply to avoid future litigation risk, HUD warned in its response to audit findings. HUD disagreed that administrative action is warranted. “Due to potential unintended consequences, [HUD Single Family] does not believe the imposition of sanctions at this time presents a viable alternative,” the department wrote. While making changes to water-safety standards, HUD said it will train lenders and appraisers to ensure compliance with the revised standards. The IG audit came in the wake of a previous audit, which found that ...

The Department of Housing and Urban Development is discontinuing its quarterly newsletter, Lender Insight, with the implementation of FHA’s Loan Review System. The change is aimed at improving both FHA’s and lenders’ quality-control and risk-management operations. HUD will be publishing a quarterly Loan Review Summary Report to provide a snapshot of the results of FHA’s quality-control review of mortgage originations over the preceding 12 months. According to HUD, the report will include only underwritten loans that were subject to a post-endorsement technical review. It does not include the results of lenders’ self-reports or any other loans that were reviewed as part of a lender examination, the agency said. The report will show the initial rating of all loans, the updated rating six months from the end of the review period, and a final rating. The “final” rating is subject to change as long as ...

Private mortgage insurers captured a larger share of the purchase-mortgage market during the third quarter of 2017 as the credit profile of new FHA production tilted toward riskier business, according to a new Inside Mortgage Finance analysis. Fannie Mae and Freddie Mac securitized $64.59 billion of purchase loans with private MI coverage during the third quarter, a 28.5 percent jump from the previous period. That was substantially greater than the ... [Includes three data charts]