Production of “agency jumbo” mortgages fell sharply in the first quarter of 2014 and is likely to drop even more as new FHA loan limits show up in endorsement data. According to a new Inside Mortgage Finance analysis, Fannie Mae, Freddie Mac and the FHA saw $10.5 billion in single-family business with loan amounts exceeding the traditional agency limit of $417,000 during the first quarter of 2014. That was down 30.6 percent from the fourth quarter. It was also the lowest three-month volume since the fourth quarter of 2008, not long after dramatically higher “emergency” loan limits were put in place by the agencies. In comparison, originations of non-agency jumbo loans fell...[Includes three data charts]

A potential conflict over funding of the FHA’s loan-quality improvement efforts and, possibly, of a pilot program that seeks to make broader use of housing counseling in FHA origination and servicing may be brewing as both the House and Senate moved towards finalizing their separate versions of fiscal 2015 appropriations for the Department of Housing and Urban Development. Last week, the Senate Appropriations Committee voted 29 to 1 to pass S. 2438, its FY 2015 HUD funding bill. Notably, it contains a provision authorizing HUD to charge and collect a new fee from FHA lenders in an amount of no more than 4 basis points of the original principal balance of mortgages originated by the lender that were insured during the previous fiscal year. According to the Senate provision, the new fee would be used...

Endorsement of FHA-insured reverse mortgages rose in the first quarter of 2014, although lenders say it may just be trailing figures reflecting the lag time between closing and approval for FHA insurance. Home Equity Conversion Mortgage guarantees totaled $4.0 billion in the first quarter, up 16.4 percent from the end of the fourth quarter in 2013 and up 4.1 percent from the same period last year, according to Inside FHA Lending’s analysis of agency data. Home purchase accounted for 92.7 percent of HECM volume but only 14.5 percent were fixed-rate. Initial principal amount at loan origination totaled $2.4 billion. The 16.4 percent increase was more likely due to the fact that a huge number of reverse mortgages closed in November and December were not insured by FHA until January, said Josh Moran, vice president of wholesale lending at Live Well Financial. Some lenders who delayed reporting to ... [1 chart]

FHA lenders are generally supportive of the agency’s proposal to add a new method for evaluating lender performance but may request certain adjustments to ensure they are not at great risk for enforcement action, according to compliance experts. Lenders believe the proposal for an additional performance metric to supplement the lender compare ratio under the Credit Watch Termination Initiative is a positive step toward providing a more well-rounded analysis of a lender’s performance when the FHA is considering further action. “In and of itself, the proposal is not a panacea, but it is certainly a step in the right direction,” said Brian Chappelle, a mortgage industry consultant. The proposal reflects the FHA’s belief that a number of factors influence a lender’s performance, not just its compare ratio. The compare ratio compares a lender’s rate of early defaults and claims to those for ...

The FHA is reportedly considering reinstating “spot” loans in condominium projects that were not on its approved development list to boost FHA-insured condo lending. Spot loans are currently prohibited, but the FHA is said to be reevaluating the product because of reports of first-time homebuyers having difficulty in obtaining FHA financing for condo unit purchases and seniors seeking reverse mortgages to tap the equity in their units. The National Association of Realtors is trying to break the impasse between the FHA and reluctant board of directors of condo projects that do not have FHA certification to resolve the financing issue. FHA-insured condominium lending has dropped to $884.4 million in the first quarter of 2014, down 70 percent from the $2.98 billion in total originations reported in the first quarter of 2013, according to Inside FHA Lending’s analysis of agency data. Even as the NAR tries to ...

The Department of Housing and Urban Development has outlined steps FHA lenders must take following the successful deployment of a new system for requesting changes and notifications as well as completing their annual recertification.The changes became effective on May 27, 2014, as the new system, Lender Electronic Assessment Portal (LEAP), went live. All of FHA’s approximately 2,500 approved lenders will now use LEAP for their annual recertification and business updates and changes. Senior HUD officials, who requested anonymity, said the transition from the Lender Assessment Subsystem (LASS) and the Institution Master File (IMF) to LEAP is almost complete, except for a few kinks HUD staff is working out. “The change in the IMF is noteworthy because it was the repository for information about all FHA lenders and it had been operating on outdated technology for a long time,” said one agency executive. “All essential information about all FHA lenders is now consolidated in a ...

Two trade groups expressed their support for the nomination of Department of Housing and Urban Development Secretary Shaun Donovan to be the director of the Office of Management and Budget and Julian Castro as his successor at HUD. The Mortgage Bankers Association praised Donovan for his work on critical initiatives, such as housing revitalization, recovery efforts related to Hurricane Sandy, borrower assistance programs and the HUD/FHA budget. Donovan would replace Sylvia Mathews Burwell, currently the director of OMB, who was chosen to replace Health and Human Services Secretary Kathleen Sebelius. Both the MBA and the National Association of Realtors praised...

Mortgage industry stakeholders are wary of a new FHA proposal to offer mortgage insurance premium reductions to borrowers who agree to complete housing counseling before and after they obtain an FHA-insured mortgage loan. The FHA is seeking comment on a proposed four-year, two-phase housing counseling pilot, “HAWK for New Homebuyers.” HAWK is an acronym for Homeowners Armed With Knowledge, and includes several initiatives aimed at broadening the use of counseling in FHA origination and servicing. HAWK is a component of the “Blueprint for Access,” which FHA announced on May 13 as part of the agency’s efforts to expand access to credit for underserved borrowers. The HAWK pilot would provide FHA pricing incentives to first-time homebuyers who participate in ...

Total FHA originations dropped significantly in the first quarter of 2014 as borrower access to credit remained a big problem for the agency, according to Inside FHA Lending’s analysis of agency data. FHA lenders ended the first quarter with a combined $28.3 billion in new originations, down 21.0 percent from the fourth quarter of 2013. Production also fell a whopping 55.6 percent from the same period a year ago. Purchase transactions comprised the bulk of new FHA loans but, so far, the much-anticipated boom in new purchase lending has yet to materialize. The high cost of FHA loans, due mainly to higher mortgage insurance premiums and a requirement to maintain mortgage insurance for the life of the loan, has made it difficult for borrowers to obtain an FHA-insured loan. Lender overlays also have restricted access to FHA credit. The FHA has raised premiums five times since 2009 to ... [1 chart]

The Department of Veterans Affairs said there may be a need for further clarification of its newly issued qualified mortgage (QM) rule to allay lender fear of potential liability if they originate VA streamlined refinances, also known as Interest Rate Reduction Refinance Loans (IRRRL), with a rebuttable presumption. Industry sources say VA lenders remain apprehensive despite assurances by agency officials that little has changed in the VA lending process as a result of the agency’s interim final rule. VA issued its QM document on May 9 in compliance with the Dodd-Frank Act, defining the types of VA loans that are “qualified mortgages” for purposes of the new ability-to-repay (ATR) provisions of the Truth in Lending Act. The Act also imposed similar requirements upon the FHA and the Department of Agriculture for the loans they insure or guarantee. The agency said it issued the rule on ...