FHA jumbo securitization continued to rise over the first six months of 2015 on the back of soaring FHA jumbo production in the second quarter. FHA jumbo originations in the second quarter more than doubled to $6.8 billion, according to the Inside Mortgage Finance database. FHA data showed that the jumbo share of originations was highest in conventional-to-FHA refinance (14.9 percent) and streamlined FHA refis (13.3 percent,) but just 9.0 percent for purchase loans. Delivery of FHA jumbos, including modified loans, into Ginnie Mae jumbo mortgage-backed securities rose 131.9 percent in the second quarter from the prior quarter and was up 115.8 percent compared to the first six months of 2014. Wells Fargo led the market in the first half with $1.4 billion in jumbos contributed to MBS, up 123 percent quarter over quarter. That was good enough for a 12.7 percent market share. PennyMac Corp. accounted for ... [ chart ]

Ginnie Mae securitized fewer rural home loans guaranteed by the U.S. Department of Agriculture in the second quarter of 2015 compared to the previous quarter, according to analysis of agency data. A total of $8.4 billion of USDA loans were securitized during the first six months of 2015, down 2.1 percent from the same period last year. Securitization volume also dropped by as much quarter over quarter. Chase led all USDA securitizers with $2.6 billion in loans securitized during the first half of the year for a commanding 30.4 share of the market. Wells Fargo funneled $1.1 billion in USDA loans into Ginnie MBS, resulting in a 13.1 market share, while PennyMac delivered $609.7 million for securitization. U.S. Bank closed the first half with $260.3 million in securitized USDA mortgages despite a 31.4 percent drop in the second quarter. Pacific Union Financial rounded out the top five USDA loan securitizers with ... [ chart ]

The FHA should make further adjustments to its latest loan-level certification proposal to fully achieve its aim of limiting lenders’ False Claims Act liability, according to an Urban Institute analysis. As drafted, the agency’s proposed measures to limit liability to errors that lenders can and should avoid appear to fall short of their objective, wrote UI Senior Fellow Jim Parrott. He urged the FHA to make the small changes needed to align the severity of penalties (indemnifications, huge settlements) with the gravity of the mistakes. Many FHA lenders have restricted their lending and imposed overlays partly because of uncertainty in how the agency enforces its underwriting rules. Lenders agree with the need for tougher enforcement against mortgage fraud and misrepresentations that have cost the FHA insurance fund millions of dollars in losses. However, even a minor mistake or a ...

A major player in the Home Equity Conversion Mortgage market has agreed to pay $29.6 million to resolve allegations of submitting false claims related to the servicing of FHA-insured reverse mortgages. According to the Department of Justice, Walter Investment Management Corp., through its mortgage subsidiaries, violated the False Claims Act by submitting false claims for debenture interest from the Department of Housing and Urban Development. A debenture is a type of debt instrument not secured by physical assets or collateral. It is backed only by the issuer’s general creditworthiness and reputation. HUD requires lenders to self-report curtailment of debenture interest if it misses any foreclosure deadlines. Under the HECM program, a loan becomes due and payable when the home is sold, remains vacant for more than 12 months or upon the ...

FHA lenders funded $7.8 billion in new Home Equity Conversion Mortgage loans during the first half of 2015, up 8.2 percent from the same period a year ago. HECM loan production was slower in the second quarter with originations down 1.1 percent from the prior quarter. Purchase loans accounted for 86.1 percent of all HECM transactions during the first six months. Interestingly, borrower bias against adjustable-rate loans appeared to have eased. Fixed-rate HECMs accounted for only 15.4 percent of originations during the first half of the year. Initial principal amount at loan origination totaled $4.6 billion over the same period. On a fiscal year-to-date basis, the FHA reported a total of 53,372 HECM endorsements, up from 47,662 HECM endorsements in fiscal YTD 2014. Meanwhile, HECM endorsed cases increased to 5,750 in August compared to ... [ chart ]

The Department of Housing and Urban Development recently saw its long-running attempt to recover $179 million from a bankrupt FHA lender come to a disappointing close, receiving only a little over half-a-million dollars after liquidation. HUD’s Inspector General gave the agency the green light to book its share of funds available to pay an $89.9 million HUD claim against the now-defunct lender Taylor, Bean & Whitaker, ending further action against the company. In 2006, whistleblowers filed a “qui tam” lawsuit in federal district court in Georgia alleging that TBW and Home America Mortgage had falsely certified and approved poorly underwritten loans for FHA insurance. In 2009, the two mortgage lenders filed for bankruptcy separately but were later consolidated by the court into one bankruptcy case. In May 2010, the Department of Justice, on behalf of HUD, filed a ...

Fannie Mae and Freddie Mac are expected to explore more front-end risk-sharing transactions while continuing to issue their popular debt offerings that pay investors based on the performance of reference pools of newly originated mortgages. Redwood Trust has done front-end risk-share deals with both Fannie and Freddie. The most recent was a transaction with Freddie in the third quarter, which covered a $1 billion pool and Redwood absorbing the first 1 percent of credit losses on the delivered loans. “Redwood expects...

A stable private mortgage insurance industry is expected to emerge as the residential real estate market continues its recovery but uncertainty related to new risk-based regulatory capital standards from the National Association of Insurance Commissioners could derail or hinder progress, according to a new analysis by Fitch Ratings. So far, the MI industry has returned to profitability with more stability in the market and the continued presence of Fannie Mae and Freddie Mac in the residential market. Stronger regulatory standards bode well for the industry’s stability as well, Fitch noted. The long-term viability of the MI industry does not appear...

The Blackstone Group, which has been gobbling up mortgage banking franchises of late, may have its eye on the mortgage insurance space. But for now it does not appear that it plans to rebuild what’s left of PMI Mortgage insurance as a going concern. As usual, the investment banker is saying little about what it plans to do with its “strategic investment” in The PMI Group, a once top-ranked MI that was placed into receivership back in 2012. PMI isn’t talking either. The investment, revealed last week, was made through the Blackstone Tactical Opportunities Fund. When the announcement was first unveiled, both analysts and MI professionals were left...

Industry trade groups are calling for the withdrawal of a proposed servicing rule that would set new deadlines for filing FHA insurance claims and penalize lenders with termination of insurance coverage if they failed to comply. Banks, independent mortgage lenders and credit unions warn that FHA’s proposed changes to its claims regulations could result in higher interest rates, credit restrictions and lenders exiting from the FHA program. Such effects could be magnified in the hardest hit housing markets, particularly in states that have long foreclosure timelines or older housing stock. The FHA proposal addresses...