FHA originations dropped a hefty 28.3 percent in February from January and 59.1 percent from the same period a year ago, according to Inside FHA Lending’s analysis of agency data. FHA lenders reported $8.2 billion in new forward mortgages for February, down from $11.4 billion for January and $19.5 billion from a year ago. Approximately 73.9 percent of the loans were purchase mortgages. Industry observers attributed the continuing decline in FHA production to multiple and costly insurance premium hikes, revocation of the borrower’s right to cancel premium payments during the term of the loan and rising interest rates. For the week ending April 18, the interest rate for a 30-year fixed-rate mortgage with FHA insurance increased to 4.20 percent from 4.14 percent, according to the Mortgage Bankers Association weekly application survey. FHA officials said the policy changes were necessary to ... [1 chart]

HUD Secretary Shaun Donovan said this week that housing finance reform can no longer be put off, but no more so than for the FHA which continues to play an “outsized role” in the mortgage market as private capital remains on the sidelines. Speaking in New York at an event co-hosted by the Bipartisan Policy Center, Donovan said the Obama administration is squarely behind the legislative proposal by Senate Banking, Housing, and Urban Affairs Committee Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID. “Despite its imperfections, does this bill represent progress? Absolutely,” said Donovan, seeking to win over housing advocacy groups disenchanted with the bill. “When looking for ways to improve [the bill], let’s not lose sight of its potential. Let’s not forget its importance to the housing market and its future.” The Johnson-Crapo legislative proposal calls for a wind-down of Fannie Mae and Freddie Mac and creation of a ...

Even in the depths of the financial crisis, the mortgage industry was producing more new loans than it did during the first quarter of 2014, according to new Inside Mortgage Finance estimates. Mortgage lenders generated just $235 billion of new home loans during the first three months of this year. That was down 23.0 percent from the fourth quarter’s estimated $305 billion in originations and it was off 58.0 percent from the first quarter of 2013. It was...[Includes one data chart]

Declaring this week that “inaction is simply not an option,” Housing and Urban Development Secretary Shaun Donovan said that the Senate’s pending bipartisan housing finance reform bill represents “the single best chance” to overhaul the mortgage-finance market this decade. Speaking in New York at an event co-hosted by the Bipartisan Policy Center, Donovan said the Obama administration is squarely behind the legislative proposal by Senate Banking, Housing, and Urban Affairs Committee Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID. “Despite its imperfections, does...

Activity Plunges. Fannie Mae and Freddie Mac securitized just $29.95 billion of single-family mortgages with private mortgage-insurance coverage during the first quarter of 2014, a 30.9 percent decline from the previous period, according to an analysis and ranking by Inside Mortgage Finance, an affiliated publication. The steepness of the private MI downturn was in line with the 29.1 percent downturn in overall business at the two GSEs from the fourth quarter of 2013. And the flow of private MI loans in early 2014 was down 40.2 percent from the first quarter of last year, a less severe drop than the 63.7 swoon in the overall GSE market over that period.

Fannie Mae, Freddie Mac and Ginnie Mae saw much lower business volume in both purchase-money mortgages and refinance loans during the first quarter of 2014, according to a new Inside Mortgage Finance analysis and ranking. The agencies securitized a total of $95.9 billion of purchase mortgages during the first three months of the year, down 28.8 percent from the previous quarter. That was a steeper decline than in refinance volume, which slid 24.7 percent from the fourth quarter of 2013. Compared to a year ago, the purchase market continued...[Includes three data charts]

FHA Commissioner Carol Galante quashed any industry hope of seeing mortgage insurance premiums lowered at this time, saying that while the Mutual Mortgage Insurance Fund has shown some improvement, full recovery is still far off. In remarks during the Mortgage Bankers Association’s National Advocacy Conference this week, Galante also defended a provision in the president’s FY 2015 budget proposal seeking statutory authority for the FHA to collect an administrative fee from lenders to help fund quality control improvements. Both issues are high up on the MBA’s lobbying priorities as members gathered in Washington, DC, this week to meet with lawmakers and their staff to discuss FHA and other key industry concerns. Galante said the Department of Housing and Urban Development is currently focused on strengthening the MMI Fund and expanding access to credit for all qualified borrowers. The FHA raised pricing five times from ...

The Mortgage Bankers Association is urging the Department of Housing and Urban Development to provide a transparent process by which interested parties could request a recalculation of the FHA loan limits and present supporting evidence. By statute, maximums for FHA loan limits in high-cost areas were reduced to $625,500 from $729,750 at the beginning of the year for one-unit residential properties, the same maximum loan limit for Fannie Mae and Freddie Mac for similar properties in high-cost areas. The MBA said HUD made further reductions in FHA FY 2014 loan limits in approximately 300 counties and county equivalents across the country, with many experiencing significant reductions. The trade group believes these changes were not required by statute. To the extent that the loan-limit reductions in those areas were discretionary, the MBA strongly urged HUD to moderate its ...

Bank of America and James Nutter & Co. have agreed to indemnify the Department of Housing and Urban Development to resolve allegations that they failed to perform due diligence in underwriting Home Equity Conversion Mortgage loans. An audit of the HECM program by the HUD Office of Inspector General found that the financial institutions allowed 33 HECM borrowers to take out more than one loan, a violation of program requirements. The program requires borrowers to reside in the mortgaged residence as their principal residence. In addition, borrowers may not have more than one principal residence at the same time. In BofA’s case, one borrower obtained two HECM loans on properties she owned in Massachusetts and Florida, both of which she identified as her principal residence. The HUD OIG said there was sufficient information to alert BofA and the underwriter that ...

Beginning June 1, 2014, securitizations backed by Home Equity Conversion Mortgages may not include HECM loans that provide for future draws at a fixed rate of interest. Specifically, Ginnie Mae warned that the potentially excessive risk associated with such HECM loans might be more than what the agency could handle in the event of an issuer default. The prohibition applies to fixed-rate HECM loans where the borrower has the option to select a payment plan that allows future advances against the principal limit. These loans give rise to the risk that such advances will become uneconomic should interest rates rise from when the loan is originated, according to Ginnie Mae. The impact of negative spreads between a fixed noted rate and future prevailing rates could be ...