An Urban Institute analysis echoed observations in the FY 2015 actuarial audit of the FHA Mutual Mortgage Insurance Fund, calling for the separation of the highly volatile reverse mortgage portfolio from the fund. Assessing the performances of the larger forward mortgage portfolio and the smaller Home Equity Conversion Mortgage portfolio when determining FHA’s financial status results in an inaccurate picture, warned Laurie Goodman, director of the institute’s Housing Finance Policy Center. Including the highly unstable, unpredictable HECM business in FHA’s solvency calculation severely distorts the fund’s true financial condition, she said. Goodman’s dire warning puts a damper on the actuarial audit, which, for the first time since 2009, reported the fund’s capital ratio over the 2.0 percent statutory threshold, up from 0.41 percent in FY 2014 and a year earlier than projected in the ...

A coalition of financial services trade groups expressed support for the permanent extension of the one-year protection from foreclosure for service members who have just left the military. The provision under the Servicemembers Civil Relief Act will expire at the end of 2015 and revert to the original 90-day protection unless extended by legislation. Eight industry trade organizations in a joint letter urged House lawmakers to extend the provision through 2016 if they cannot make it permanent. Some service members continue to face financial hardship upon returning to civilian life, the groups noted. Slow recoveries in real-estate markets in certain areas of the country, particularly those around military bases, make it difficult for those retiring or opting out after their tour of duty is up to sell their houses. The protection becomes effective on the date the service member is ...

The House Financial Services Committee this week passed H.R. 3700, the “Housing Opportunities Through Modernization Act,” moving forward reform measures that would make it easier for condominium investors to obtain FHA financing. Sponsored by Rep. Blaine Luetkemeyer, R-MO, chairman of the House Financial Services subcommittee on Housing and Insurance, and Rep. Emanuel Cleaver, D-MO, the bill passed with a bipartisan vote of 44-10. Among other things, the bill would ease FHA’s restrictions on the purchase and sale of condo units. It includes changes to the certification and recertification process, owner/occupancy ratio, commercial space requirements and private transfer fees. Specifically, H.R. 3700 would require the streamlining of the FHA condo recertification process by considering a longer time period before a condo project recertifies. Currently, certification is ...

Morningstar Credit Ratings proposed new criteria this week to rate residential MBS. The rating service published similar criteria in May but Morningstar has only rated one deal backed by new residential mortgages since then. The biggest addition in the proposed criteria details how Morningstar plans to handle transactions that include primary mortgage insurance. The provision could help Morningstar rate risk-sharing transactions from the government-sponsored enterprises. The rating service said...

Most mortgage lenders reported a significant uptick in purchase-mortgage originations during the third quarter of 2015, though there is little sign that originators are lowering credit standards to stimulate more business. According to revised estimates by Inside Mortgage Finance, purchase-mortgage originations climbed 10.7 percent from the second to the third quarter of this year, hitting $280 billion. At that level, the purchase market was the strongest it has been since the third quarter of 2007. At the same time, credit standards – at least in the agency market – have eased...[Includes two data tables]

Combining the Home Equity Conversion Mortgage program and the traditional forward mortgage program in assessing the soundness of the FHA Mutual Mortgage Insurance Fund could produce inaccurate results and ill-advised policy changes, warned the Urban Institute. Analysts at the institute said the FHA’s basis for assessing the MMI Fund’s solvency creates a distorted picture of the value of the fund and that the agency should separately assess its forward and reverse mortgage businesses to get an accurate picture of their performance and impact on the fund. The FY 2015 actuarial report drew...

The first nine months of 2015 have seen a tremendous increase in FHA single-family originations as borrowers took advantage of a 50 basis-point premium reduction implemented earlier this year, according to Inside FHA/VA Lending’s analysis of agency data. Total FHA loan production during the first nine months of 2015 was up a whopping 81.3 percent increase. Data also showed a 13.1 percent increase in the third quarter from the prior quarter. It is hard to imagine that back in February this year, we reported a dismal ending for 2014, where overlays and high-loan costs caused an 8.1 percent decline in FHA endorsements in the fourth quarter and a 36.6 percent drop from 2013. In 2015, FHA fixed-rate originations increased 12.7 percent from the second to the third quarter, and rose 86.0 percent on a year-to-date basis. In 2014, conversion ... [ 2 charts ].

Despite FHA’s denial of further mortgage insurance premium reductions any time soon, stakeholders are holding out hope for another cut in the near future. Those supporting the idea of another pricing adjustment say it could open the door wider for more borrowers to use the FHA single-family program and generate the volume needed to offset any potential revenue loss that may result from the reduction. But Housing and Urban Development Secretary Julian Castro and his top officials have denied any plans of reducing MIPs. Castro has called such talk “premature,” despite a positive FY 2015 actuarial evaluation of the FHA’s Mutual Mortgage Insurance Fund, which some claim could be used to justify another premium reduction. Principal Deputy Assistant Secretary for Housing and Interim FHA Chief Ed Golding, in a press briefing, said the focus is elsewhere and not on ...

The FHA has issued temporary guidance for approving condominium projects for agency financing – a good first step, according to industry groups. Stakeholders have been waiting for a broader rewrite of the condominium rules for years, and they see the interim guidance as limited but positive. Announced on Nov. 13, the guidance is in place for a year while the FHA works on a more comprehensive rule that addresses all condominium lenders’ concerns. The temporary guidelines modify the requirements for condominium project recertification. It can cost up to $3,000 and, in some cases, take more than a year, to complete a condominium recertification project. The certification is good for only two years. Condo projects run afoul of FHA rules when the certification lapses, rendering the ...