For the first time since October 2008, Moody’s Investors Service upgraded two top private mortgage insurance companies to investment grade due to strong performance of new insurance written, cost savings and fewer losses. However, risk factors, including proposed capital regulations from the National Association of Insurance Commissioners, could adversely impact the ratings. Mortgage Guaranty Insurance Corp. and Radian Guaranty now have Baa3 ratings from Moody’s, although other rating servicers appear disinclined to follow. Both MIs continue to be rated below investment grade by Standard & Poor’s. The improved ratings come...

The Department of Veterans Affairs has issued guidance to help VA lenders understand better the agency’s interim final rule on a borrower’s ability to repay and qualified mortgages. The guidance was published in a frequently asked questions (FAQs) format to clarify and explain both the VA’s ATR and QM standards. The VA interim final rule became effective on May 9, 2014, the date it was published in the Federal Register. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires residential mortgage lenders to make a reasonable and good faith determination that the consumer has a reasonable ability to repay the loan according to its terms. The statute directed the Consumer Financial Protection Bureau to develop and implement an ATR/QM rule. Under the CFPB’s final rule, a qualified mortgage is a category of loans that have certain, more stable features that ...

The Department of Veterans Affairs and the U.S. Department of Agriculture Rural Housing Service have issued 2016 guidelines for lending to borrowers who have gone through a bankruptcy, foreclosure or a short sale. Under VA guidelines, borrowers emerging from a previous Chapter 7 bankruptcy may apply for a VA loan two years after the bankruptcy discharge. Borrowers with a Chapter 13 bankruptcy may qualify for a new VA loan if they have made at least 12 months of payments and the lender concludes that they have reestablished satisfactory credit. Before the bankruptcy-tainted borrower applies for a VA loan, however, the trustee or the bankruptcy judge must approve the new loan. The lender may put in a good word on behalf of the borrower provided the latter has met all requirements for a new loan. Borrowers may apply for a VA loan two years after a foreclosure or a short sale. In the case of ...

The FHA flood insurance requirements could make it difficult or more risky for lenders to originate FHA loans in states with significant flood risk or where flood maps may not accurately reflect the current flood risks, the Mortgage Bankers Association warned. Testifying during a recent hearing on private flood insurance, Steven Bradshaw, executive vice president of Standard Mortgage and MBA representative, warned that FHA’s current requirement for lenders to secure flood insurance on properties only if it is located within a high flood-risk zone has had some unexpected adverse impact, particularly in the wake of hurricane-related catastrophes. Bradshaw noted that many homes that were destroyed by Hurricane Katrina were not located in special flood-hazard areas (SFHA) and therefore were not required to have flood insurance. “Sadly, these borrowers were often uninsured and the ...

On Jan. 21, 2016, the FHA issued a reminder to lenders to register for one of the three remaining phases of Electronic Appraisal Delivery (EAD) Onboarding, before the electronic appraisal submission requirements become mandatory on June 27, 2016. The remaining onboarding phases are the following: Feb. 15-April 15 (registration closes on Feb. 14); March 15-May 15 (registration closes March 14); and April 15-June 15 (registration closes on April 14). All appraisals for FHA case numbers assigned on or after June 27, 2016, must be submitted to FHA through the ...

Industry-wide mortgage originations slowed significantly in the fourth quarter of 2015, although lenders reported a wide range of results compared to the previous quarter. An estimated $385.0 billion of first-lien home mortgages were originated in the final three months of 2015, according to a new Inside Mortgage Finance ranking and analysis. That was down 15.4 percent from the third quarter, but it brought annual production to an estimated $1.735 trillion for the year, a 33.5 percent increase from 2014. Annual origination volume in 2015 was...[Includes two data tables]

Bowing to pressure from investors – in particular, Carl Icahn – American International Group this week rolled out a blueprint to increase shareholder value, including a partial spin-off of its top-ranked mortgage insurance division, United Guaranty Corp. Although both AIG and UGC were not entertaining questions on the details, a spinoff of the MI business could come by mid-year with up to 19.9 percent of the unit being sold to the public. Eventually, AIG said...

Mortgage Guaranty Insurance Corp. will readjust its current premium rates to meet its modest return-on-equity goal and achieve limited growth in its insurance-in-force in 2016, but whether this will precipitate similar moves across the private mortgage insurance industry remains to be seen. In announcing the company’s fourth quarter 2015 results, Patrick Sinks, chief executive officer of MGIC Investment Corp. and Mortgage Guaranty Insurance Corp., disclosed plans to revise premium rates to “generate comparable returns” across the spectrum of loans the company insures. MGIC expects...

There’s mounting evidence that the Consumer Financial Protection Bureau’s disclosure rule is having an impact on home sales and purchase mortgages, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. In December, closing times on mortgage-financed home purchases continued to stretch out and fewer sales closed on time. Tom Popik, research director of Campbell Surveys, said the CFPB’s Truth in Lending/Real Estate Settlement Procedures Act disclosure rule appears to have caused slight increases in closing times and the share of missed closings for the second month in a row. “Closing time metrics are still showing...

The Mortgage Bankers Association and flood insurance providers expressed support for legislation that would ensure the continued availability of federal flood insurance and, at the same time, facilitate the development of a private market for flood insurance. Industry representatives called for appropriate and timely long-term reforms to improve the National Flood Insurance Program, which provides mandatory flood insurance through private “write-your-own” flood insurance providers. Having gone through several extensions by Congress, the NFIP is scheduled to expire on Sept. 30, 2017, hence the call for private capital to provide flood coverage outside the NFIP. Testifying on behalf of the MBA during a recent House Financial Services Committee hearing, Steven Bradshaw, executive vice president of Standard Mortgage, said...