Production of FHA-insured jumbo loans ballooned in the third quarter of 2014 reflecting heightened activity in this loan segment during the period. A 23.7 percent quarter-over-quarter surge helped push FHA jumbo lenders’ total volume to $7.71 billion at the end of the nine-month period ending Sept. 30. It was a significant increase for a segment that represents only a sliver of FHA’s overall business. However, compared to last year’s first nine months, volume was down by almost half (48.8 percent) as lenders struggled to keep pace with last year’s output. Strong purchase demand helped drive FHA jumbo originations (all FHA loans over $417,000 up to $625,500 in high-cost areas), as purchase mortgages accounted for 81.1 percent of all FHA jumbos originated during the first nine months of the year. Fixed-rates comprised 86.4 percent of FHA jumbos originated during ... [1 chart]

The Mortgage Bankers Association this week declined to participate in a panel discussion on FHA hosted by the American Enterprise Institute because the trade group did not believe the discussion would be balanced and though it would favor only a certain point of view. The topic was “FHA from 1934 to 1938: Lessons for Wealth Building,” with Ed Pinto, a resident fellow at AEI, and Dave Stevens, MBA president, as presenters. Stevens, however, decided to pull out of the event when he saw the format. In a letter to the AEI organizers, Stevens said he agreed to be a presenter thinking the debate “would be a balanced approach.” “When I first agreed to do this, I did not expect that the format would be 45 minutes of [Ed Pinto] and then no more than 12 minutes for me to respond,” he wrote. “That’s an extremely lopsided approach that did not appear to be ...

President Obama this week signed a comprehensive package of spending bills, providing funding to federal agencies through fiscal 2015 but missing two initiatives that would have toughened FHA enforcement and benefited new homeowners through enhanced housing counseling. The FY 2015 Consolidated and Further Continuing Appropriations Act is comprised of 11 funding bills for all federal agencies, including the Department of Housing and Urban Development. The bill provides...

Private mortgage insurers ended the third quarter of 2014 on a strong note, increasing their combined volume of net premiums written to $1.05 billion, up 9.8 percent from the prior quarter and 2.8 percent over the first nine months compared to the same period a year ago, according to an Inside Mortgage Trends analysis of industry data. Based on the upward production trend over the last three quarters, it appears the private MIs are on their way to a strong close at year end ...

Quicken Loans, the nation’s largest nonbank lender, recently offered a lender-paid mortgage insurance “sale” through loan brokers, committing $100 million to the effort and wrapping up the promotion in roughly 60 hours. According to Tod Highfield, vice president of loan production at Quicken, the sale wasn’t designed to hit any volume targets per se, but was meant to heighten the firm’s profile among certain segments of the origination market, namely brokers, credit unions and community banks. The offer was pitched...

The FHA’s accounting of receivables from settled legal claims and partial claim notes is so sloppy that the exact amount collected might be difficult to gauge, according to an internal audit of the agency’s FY 2014 and 2013 financial statements. Conducted by the Department of Housing and Urban Development’s Inspector General, the audit concluded that the FHA had booked receivables from seven cash settlements totaling $1.2 billion in FY 2014 but collected only $466.4 million of those settlements. In addition, during fiscal 2014, as part of its loss mitigation efforts to bring delinquent loans current, the FHA paid $4.4 billion to lenders for partial claims but never received the required promissory notes from the lenders for $1.5 billion of the claim payments. FHA rules require lenders to provide the agency with promissory notes for the payments made or ...

Reports that the Senate Appropriations Committee might include a proposed FHA administrative fee in the Senate’s spending bill for financial and housing agencies is causing a furor within the mortgage financing industry. Industry groups have come out in force, urging the leaders of the Senate committee to remove the provision from a continuing resolution to fund the government beyond Dec. 11. There is speculation that the House might go along with the fee. The provision, expected to raise $30 million for FHA quality assurance efforts, would allow the Department of Housing and Urban Development to charge a fee of no more than 4 basis points of the original principal balance of all FHA-insured mortgages a lender made in the previous fiscal year. HUD originally made the request in President Obama’s proposed FY 2015 budget. Over industry objections, the Senate later incorporated the ...

The FHA and Ginnie Mae will share in the record-setting $16.7 billion settlement between Bank of America, the Department of Justice and certain other federal agencies and six states to resolve claims related to mortgage fraud and toxic mortgage-backed securities. The FHA will receive approximately $800 million and an undisclosed amount for consumer relief from BofA. The bank was accused of falsely certifying poorly underwritten loans for FHA insurance, resulting in huge losses for the agency. It is unclear how much Ginnie Mae’s share would be from the settlement. “As a direct endorser of FHA-insured loans, Bank of America performs a critical role in home lending,” said U.S. Attorney Loretta Lynch for the Eastern District of New York during the announcement of the global settlement in August. “In obtaining a payment of $800 million and sweeping relief for troubled homeowners, we have not ...

A provision on lender-placed insurance in the servicing segment of the FHA’s draft Single Family Housing Policy Handbook appears to contradict the agency’s previously stated position on LPI, according to the American Bankers Association. The ABA urged the FHA to retain the current policy regarding a lender’s discretion in requiring hazard and flood insurance for loans the agency insures. In a comment letter, the ABA expressed concern about the FHA’s new proposed standard for LPI, which could limit the amount of LPI coverage a lender or servicer could impose on a borrower to the outstanding balance of the loan. It would apply broadly to hazard insurance, including flood insurance. There are several problems with this approach, the ABA said. The group noted that Congress had established a standard which requires any home construction in a special flood hazard area (SFHA) to obtain “at least” ...

Unless contravened by another federal or state statute or jurisdiction, FHA lenders must use the agency’s adjusted fair market value (AFMV) for all foreclosure sales and post-foreclosure sales associated with defaulted FHA loans, according to the FHA. The FHA said it issued guidance because more lenders are using FHA procedures regarding claims without conveyance of title. Before applying the AFMV, lenders must ensure that th loan’s FHA insurance is still active and that the loan is not subject to indemnification. Both items may be verified by checking Neighborhood Watch. Working with the borrower, the lender must make sure that all possible applicable home-retention and loss-mitigation options have been considered and explored before moving to an AFMV alternative. In addition, the lender must determine that the borrower’s case does not meet the criteria for a pre-foreclosure sale or deed-in-lieu of foreclosure. Mortgagees may not proceed with any foreclosure sale until ...