Mortgage production ran into a seasonal buzz-kill and stiffer headwinds from interest rates during the third quarter of 2015, leading to a modest decline in volume, according to a new InsideMortgage Finance market analysis and ranking. An estimated $455.0 billion of single-family first-lien mortgages were originated during the third quarter, down 7.1 percent from the second quarter of 2015. But on a year-to-date basis, total originations were up 42.9 percent from the first nine months of last year. In fact, at $1.350 trillion, production through the end of September had already topped last year’s $1.300 trillion. A lot of this year’s increase came...[Includes two data tables]

Although most analysts and industry observers agree that the FHA cut in mortgage insurance premiums, effective in January, has resulted in stronger purchase volumes and credit availability, opinions vary as to whether another reduction is on the way. The FY 2014 independent actuarial audit of the FHA Mutual Mortgage Insurance Fund projected FHA’s total loan production in fiscal 2015 at $124 billion. With the FHA pricing adjustment, production is now expected to increase by 60 percent, with total production estimated at $200 billion by the end of the fiscal year, said Brian Chappelle, an industry consultant. As program fundamentals trend upward, Chappelle is...

A number of factors are making new MBS in the to-be-announced market less attractive to investors than MBS issued a few years ago, according to a report from Deutsche Bank Securities. “Aggressive servicers keep picking up market share, credit quality keeps softening and loan balances edge up,” the analysts said. “It adds up to declining quality for TBA MBS.” While those trends certainly aren’t new, Deutsche Bank said...

The Federal Housing Finance Agency is toying with the idea of “grandfathering” the membership of captive insurance affiliates in the Federal Home Loan Bank system, while blocking out others, according to industry observers tracking the matter. Such a final rule would benefit MBS-investing real estate investment trusts that gained entry through a captive. A few years back, several REITs found a loophole in the FHLBank membership rules and exploited it before the FHFA put a moratorium on new captives joining the system. The moratorium expired...

The trade group for private mortgage insurers this week said Fannie Mae and Freddie Mac programs that would allow sellers to obtain deeper MI coverage, up to 50 percent of the home’s value, could help lower guaranty fees charged by the two government-sponsored enterprises. U.S. Mortgage Insurers said greater front-end risk sharing almost doubles the amount of loss protection to the GSEs and allows them to reduce their committed capital for this risk by about 75 percent. As a result, the group noted...

The Department of Housing and Urban Development late last week withdrew a controversial proposed rule that aimed to speed the process by which residential servicers file FHA insurance claims. A number of industry participants were critical of the proposed claims-filing deadline, warning that it would prompt significant problems. Among other provisions, the proposal issued in July would have established a deadline for insurance claims to be filed with the FHA. “This new deadline will ensure FHA can effectively manage and process timely claims,” HUD said at the time. Originally, the agency proposed...

Some observers say the reduction in the annual mortgage insurance premium earlier this year has put the FHA Single Family Mutual Mortgage Insurance Fund on an accelerated path to recovery. Whether that is enough to get the fund back to its statutory 2 percent capital reserve ratio remains to be seen. The FHA is getting stronger faster, said Brian Chappelle, a mortgage industry consultant, in an analysis foreshadowing the FHA’s November actuarial report on the state of the MMIF. Last year’s independent actuary projected FHA’s total loan production in 2015 at $124 billion, but the MIP cut has led to a 60 percent increase in the volume forecast, said Chappelle. In all likelihood, the FHA could be looking at more than $200 billion in total originations this year, he predicted. “When a business lowers its prices, it’s going to make it up in volume,” the consultant noted. “Thus, FHA revenue is going to be ...

A VA mortgage servicer must immediately schedule an inspection and protect a property securing a VA loan if the property has been left vacant or abandoned by its owners. According to new guidelines issued by the VA, loan servicers must conduct an inspection immediately after becoming aware that the property’s physical condition may be in jeopardy. If local codes require more extensive protection than what VA requires, servicers should adhere to local requirements, the agency said. Failure to protect and preserve the collateral may result in a reduced guaranty claim if the servicer’s failure increased the VA’s liability on the loan. Unless the loan is undergoing loss mitigation, a property inspection is also required before the 60th day of delinquency or before starting foreclosure, whichever is earlier, the VA said. In addition, a property inspection will be required at least once a month after ...

Fifth Third Bancorp became the latest mortgagee to fall victim to the federal False Claims Act after it agreed recently to an $85 million settlement with the government over alleged failures to self-report defective mortgages to the FHA. The settlement between the Department of Justice and FTB and its banking subsidiary resolves civil fraud claims arising from the bank’s origination of FHA-insured residential mortgages. According to the DOJ, the Ohio-based direct endorsement lender admitted to originating approximately 1,400 home loans it previously certified as FHA-eligible but which later turned out to be materially defective. FTB, however, did not report its discovery to the Department of Housing and Urban Development as required, resulting in millions of dollars in losses to the FHA Mutual Mortgage Insurance Fund. Under the settlement terms approved by ...

The VA loan is a great option for veterans and servicemembers looking to purchase a new home. However, did you know it could also be paired with other home-financing programs to give the borrower a bigger bang for the buck? For instance, many real estate brokers and mortgage lenders are unaware that the VA loan can be used with certain products offered through state housing finance agencies to provide greater benefits to veterans and members of the military. The Colorado Housing and Finance Authority (CHFA) offers a tax credit program that allows VA borrowers to claim a percentage of the annual mortgage interest paid each year as a federal tax credit on their federal income tax returns. “It is not a tax deduction,” said Chad Patterson, a real estate agent with RE/MAX Traditions in Longmont, CO. “This can be a huge asset to the ...