New FHA guidance for dealing with mortgages with a Property Assessed Clean Energy (PACE) obligation went into effect last week but uncertainty lingers and its full impact remains to be seen, according to an industry attorney. The Department of Housing and Urban Development has issued guidance specifically allowing properties encumbered by a PACE lien to be eligible for FHA mortgage financing for both purchase and refinance loans. The department of Veterans Affairs has issued similar guidance. According to Erika Sonstroem, an attorney with the law firm Bradley Arant Boult Cummings, the PACE industry is touting the guidance in its pitches to lenders as posing no risk to mortgage investors. PACE is a program that lends money to homeowners for home-energy savings projects. It is treated much like a tax lien on a property and is included in the ...

With liquidity and an uncertain regulatory environment dominating this year’s Ginnie Mae summit in Washington, DC, top agency officials called on stakeholders and other market participants to stand up to the challenges posed by a rapidly evolving Ginnie marketplace. Chief among those challenges is the growing domination of the Ginnie market by independent mortgage bankers, who now account for 80 percent of the agency’s monthly issuance volume. Ginnie President Ted Tozer reiterated his concerns raised last year about the increasing number of nonbanks in the agency mortgage-backed securities market with very little experience and liquidity. In his opening remarks, Tozer acknowledged...

An increasing share of purchase mortgages have missed their scheduled closing dates in recent months, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Many of the delays are tied to a shortage of appraisers as home sale activity increased during the spring and summer. Just before the start of the spring home-buying season, the on-time share of closings was at high levels for mortgage-financed purchases. Some 76.6 percent of purchases in April with a low downpayment mortgage securitized by Fannie Mae and Freddie Mac closed on time, based on a three-month moving average. The on-time closing share has declined...

The House Financial Services Committee this week marked up, mostly on party lines, a comprehensive alternative to the Dodd-Frank Act that would, among other things, create a legal safe harbor for mortgage loans that are originated by a lender and then held in portfolio on its balance sheet. Democrats unanimously opposed the bill and refused to offer a single amendment, continually railing against Wells Fargo and accusing the Republicans of wanting to take the nation “back to the regulatory Stone Age.” The bill passed...

The Federal Emergency Management Agency this week updated Senate lawmakers on efforts to produce more accurate flood maps and flood-risk models. A key change will shift flood-risk analysis and insurance pricing from the so-called 1 percent annual chance of flooding to the actual flood risk to the structure itself. Testifying before the Senate Committee on Banking, Housing and Urban Affairs, FEMA Administrator Roy Wright said adopting the structure-based methodology would require an entirely new approach in flood insurance rating and underwriting, including new regulatory hazard and risk products. Other witnesses at the hearing expressed support for the recommendation, saying it would remove the uncertainty caused by constantly changing flood lines in FEMA maps. The hearing is...

An internal compliance audit has uncovered weaknesses in the FHA’s information systems that could expose the agency to hacking. The Department of Housing and Urban Development’s Inspector General recently issued an audit report indicating that FHA’s Single Family Insurance System (SFIS) and Single Family Insurance Claims Subsystem could be in danger of security breaches. However, the report withheld details of the audit, saying the findings were not for public disclosure. The report explained that the audit was part of the internal-control assessments required for the FY 2015 financial statement audit under the Chief Financial Officer’s Act of 1996. The audit’s objective was to provide an assessment of SFIS control compliance with HUD’s information-technology policies and federal IT system security and financial management requirements. The SFIS contains information on FHA borrowers, including ...

The FHA is seeking comment on proposals for revising the schedule of fees an agency-approved consultant may charge on a Section 203(k) property repair and rehabilitation mortgage. The agency wants public comment on whether fees charged by FHA 203(k) consultants should be based on the total cost of repairs, as they are currently, or on other metrics. Consultants charge varying fees on a standard 203(k) mortgage and a limited 203(k) mortgage. The standard FHA repair/rehab mortgage is designed for remodeling, rehabilitation and repairs that involve structural or more complex work that will cost more than $5,000. The limited 203(k) home loan is only for minor remodeling and non-structural repairs. An FHA-approved consultant is required for all standard 203(k) mortgages but not necessarily for a limited 203(k) home loan. FHA-approved 203(k) consultants who are placed on ...

Effective Oct. 1, 2016, the U.S. Department of Agriculture’s Rural Housing Service will reduce the one-time upfront funding fee for single-family housing guaranteed loans to spur rural home-loan financing. The RHS will cut the funding fee from the current rate of 2.75 percent of the loan amount to 1.0 percent. The agency notified lenders of the change last June. In addition, the fee for servicing USDA-guaranteed loans will decrease to 0.35 percent from 0.50 percent. That comes to about $30 per month per $100,000 in loan balance. The servicing fee is paid in 12 equal installments and rolled into the monthly mortgage payments. The RHS has raised both fees a number of times during the past several years to maintain the section 502 Single Family Housing program, which does not require borrowers to make any downpayment, and to avoid congressional appropriation. Last year, the RHS raised its upfront funding fee for a purchase loan, from 2.00 percent to 2.75 percent. Another reason the RHS cited for the fee reduction is that rural housing delinquencies and foreclosures are at historic lows.

While many industry experts say Fannie Mae and Freddie Mac should explore deeper mortgage insurance coverage as an alternative form of credit-risk sharing, some say the role of private MIs is overrated. The Urban Institute recently published a paper advocating a broadening of the credit-risk transfer programs at the two government-sponsored enterprises to include private MI coverage down to the 50 percent loan-to-value ratio. The think tank also encouraged Fannie and Freddie to create a more transparent lender recourse program and to diversify their highly successful debt note CRT programs to provide investors more offerings with risk segmented by LTV ratio and credit scores. Although the Mortgage Bankers Association and U.S. Mortgage Insurers, the trade group that represents private MIs, have stumped...

The new streamlined refinance programs for high loan-to-value loans to be rolled out by government-sponsored enterprises Fannie Mae and Freddie Mac next year are good news for market participants in their risk-sharing deals because they cut the risk of borrower default and the associated risk of investor loss, according to a recent report by analysts at Moody’s Investors Service. The programs are designed to provide much needed liquidity to borrowers with high LTV ratios who are current on their mortgage but can’t qualify for a more traditional refi. “The new programs are...