While the Federal Housing Finance Agency takes its time deciding whether nonbanks should be allowed to use captive insurance units to become members of a Federal Home Loan Bank, real estate investment trusts appear to be ramping up their borrowings from the system’s advance window. At least that’s what Inside Mortgage Finance found when it recently conducted a spot check of mortgage REITs that have gained access to the FHLBank system via a captive insurance subsidiary. Redwood Trust, for example, had...

The big gains in business volume at the FHA and the Veterans Administration reflect the two agencies’ differing missions, and officials at both organizations are looking at ways to improve risk management practices. Ed Golding, principal deputy assistant secretary at the Department of Housing and Urban Development, said the FHA dominates the market for high loan-to-value lending to borrowers with credit scores below 680. While some view 680 as borderline subprime, it’s the median credit score for the country, he noted during remarks at a symposium sponsored this week by the Urban Institute. “Risk management is...

Rising home values could present a new opportunity for FHA borrowers to refinance into a conventional loan and enable those borrowers who choose to stay with FHA financing to take advantage of FHA’s reduced annual mortgage insurance premium, according to lenders. With house prices on the rise, FHA borrowers are seeing a build-up in equity. This might be a good time for them to remove that monthly payment and get out of their FHA loan, said Faramaz Moeen-Ziai, vice president of national sales and production at Commerce Home Mortgage in Huntington, CA. With an FHA-insured loan, coverage is for the life of the loan while private mortgage insurance on a conventional is cancellable when paid down to 79 percent of the loan amount. This might be especially beneficial to homeowners living in homes valued far less than what they owe on the property, or to holders of ...

Mortgage industry participants are finding a recently proposed FHA rule that would cancel coverage for late claim filings too harsh. “The penalty far exceeds the crime,” said a mortgage industry consultant, echoing sentiments of lender clients. Out for comment until Sept. 4, 2015, the proposed rule would require lenders to file a claim for a real estate-owned property within three months from the date they obtain title to the property or successfully sell the property to a third party. The requirement would apply to both pre-foreclosure sale and deed-in-lieu of foreclosure. The Department of Housing and Urban Development said the proposed rule would remedy the problem of delayed claim filings – lenders hoarding claim requests and filing them in batches at the same time. HUD’s goal is to process claims sooner and get more accurate data that are accurate for the next ...

The Department of Veterans Affairs has issued guidance to servicers regarding the use of an auction service in lieu of a foreclosure sale to terminate a VA loan. The goal is to get more from foreclosure-sale proceeds to lower the veteran’s mortgage debt. Mortgage holders may find it better to pursue VA loan termination through an auction service, rather than having to waive a greater amount at foreclosure, the VA said. It also may raise awareness among potential bidders and increase marketability and competition, the agency said. While traditional foreclosure methods have long been a part of the loan termination process, they limit servicers’ chances of obtaining greater proceeds at sale, which are applied to lower the veteran’s debt. Consequently, VA ends up paying more for a claim and assuming the liability of managing and marketing a conveyed real estate-owned property. In addition, state and county ...

Lending to veterans and members of the U.S. military is expected to trend up in the second half of 2015 as the economy improves further, wages rise and unemployment declines, predicts the country’s top VA lender. “We’re seeing increased activity in housing while house values have gone up modestly, which I expect will continue in the next couple of years,” said Stan Middleman, president and chief executive of Freedom Mortgage. It is a great time for veterans to purchase a home, Middleman said, and he would he like to see more vets become homeowners. However, despite the low interest rates, crisp and clear underwriting and no downpayment required, many veterans are still not taking advantage of the VA program as they should, he noted. Middleman feels he should advertise and market the VA product more. In the past seven months, Freedom Mortgage has added ...

Industry experts are sharply divided on whether the FHA’s financial condition is actually getting better or worse. Potomac Partners, a business consultancy group, is optimistic that the FHA’s Mutual Mortgage Insurance Fund has finally turned a corner with great signs of improvement in the first quarter of 2015. Changes and adjustments made by the Department of Housing and Urban Development since last year have placed the MMI Fund on a positive trajectory to reach its required 2.0 percent capital ratio in 2016. Last year, the fund’s capital ratio improved from a negative 0.11 percent to a positive 0.41 percent and its economic value appears to be improving. Potomac Partners’ analysis looked at FHA risk, loan performance, delinquency rates, debt-to-income ratios, loan-to-value ratios, originations and claims, loss rates as well the effect of the ...

An FHA multifamily lender will face the Department of Housing and Urban Development’s Mortgagee Review Board for violations that caused more than $10 million in losses to the FHA Mutual Mortgage Insurance Fund. HUD’s inspector general recommended that Prudential Huntoon Paige Associates be brought before the board to explain how it underwrote a $19.9 million loan to develop a multifamily project for seniors in Lewisville, TX. Prudential is a Multifamily Accelerated Processing (MAP) approved lender authorized to prepare, process, review and submit loan applications for FHA multifamily mortgage insurance. The 151-unit “Amaranth at 544” project caught the IG’s eye because of early default, assignment and the significant dollar amount involved. The IG identified several underwriting deficiencies, including inadequate cash reserves at loan closing, unsupported ...

The Department of Veterans Affairs has announced measures lenders may employ to provide relief to VA borrowers whose lives and homes were upended by recent severe storms, tornados and flooding in Texas, Oklahoma and Guam. VA mortgage relief would be available to the families of borrowers who died during these natural catastrophes and to borrowers whose homes were badly damaged or destroyed. Relief is also available to those whose work environments were destroyed or severely damaged. Other people have been indirectly affected as well, and the impact may continue to ripple throughout the country, as evacuees travel nationwide to seek support and shelter from family members in unaffected areas, according to the VA. VA encourages holders of guaranteed loans to extend forbearance to distressed borrowers and to provide counseling to them. Lenders are also authorized under VA regulations to reapply prepayments to ...

Private mortgage insurance volume was up sharply in the second quarter, based on a new Inside Mortgage Finance analysis of Fannie Mae and Freddie Mac mortgage-backed securities data. The two government-sponsored enterprises securitized $52.59 billion of single-family loans with private MI coverage during the period. That was up 21.5 percent from the first quarter, and it lifted year-to-date volume 42.4 percent above the level during the first six months of last year. It was...[Includes two data tables]