A healthy housing recovery boosted mortgage origination volume during the second quarter of 2014, but production remains at relatively sluggish levels, according to a new market analysis and ranking by Inside Mortgage Finance. Single-family mortgage originations totaled an estimated $295 billion during the second quarter, up 25.5 percent from the first three months of the year. The first quarter of 2014 was the worst production environment for the mortgage industry since the end of 2000, even falling below the mark set at the depth of the financial crises in the fourth quarter of 2008. In fact, the most recent April-to-June cycle brought...[Includes three data charts]

The first-time homebuyer share of home purchases has increased for four consecutive months, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. First-time homebuyer activity tends to increase through the spring homebuying season, but the first-time homebuyer share is at particularly high levels this year. First-time homebuyers accounted for 37.2 percent of home purchases in June, based on a three-month moving average. That was up from a 34.2 percent share in March, and the last time the first-time homebuyer share of home purchases was at 37.2 percent was September 2010. According to real estate agents, first-time buyers appear...

FHA single-family endorsements fell 55.6 percent in the first four months of 2014, compared to the same period last year, but the impact was far from uniform across the country. A new analysis by Inside FHA Lending, an affiliated newsletter, shows that housing markets where FHA loan limits were reduced this year have seen a bigger drop in FHA business than elsewhere in the country. In counties with lower FHA loan limits, production in the first four months of 2014 was down 57.7 percent from a year ago, while production in markets where there was no change fell 51.3 percent. FHA lending declined...

If JPMorgan Chase were to exit the FHA program, plenty of other residential lenders would pick up the slack, according to officials at the Department of Housing and Urban Development, who in a press briefing this week indicated the agency is hardly worried about such a development. “There are plenty of other lenders,” said one senior HUD official. “Their [JPM’s] volume has dropped. Quicken is now number one.” During an earnings call last week, JPMorgan CEO Jamie Dimon questioned...

Mortgages with 620-679 credit scores accounted for more than half of FHA’s mortgage insurance business in the first quarter of 2014, up from 42.0 percent a year ago, according to the Department of Housing and Urban Development’s latest quarterly report to Congress on the state of the FHA Mutual Mortgage Insurance Fund. Data showed FHA-insured mortgages in the 620-679 credit score range, a band typically identified with borrowers with slightly tainted credit, comprised 51.1 percent of new endorsements in the first quarter. This was up from 50.1 percent in the fourth quarter of 2013. FHA endorsements in the 620-plus category started trending upward in the first quarter of 2011, while endorsements in the 720-850 credit score range began a slow decline during the same period. The distribution of borrower credit scores continued the migration seen in previous quarters, though at a ...

JPMorgan Chase chief executive Jaime Dimon this week warned that the investment bank may rethink its FHA business without some type of safe harbor to shield it from potential future liabilities arising from the Financial Institutions Reform, Recovery and Enforcement Act and the False Claims Act. In February this year, JPMorgan agreed to pay $614 million to the federal government to settle allegations that it falsely certified poorly underwritten loans for FHA endorsement, causing massive losses to taxpayers in paid claims. Dimon lashed out at the government during a telephone briefing on the company’s second-quarter 2014 earnings report. He said JPMorgan lost a tremendous amount of money over what the government claimed was fraud but was in fact a “commercial dispute” between FHA and the bank. “We collected $600 million in insurance, the [government] disputed $200 million [alleging] it was fraud ...

If an FHA borrower runs out of options for loss mitigation and home retention, a lender must first consider a pre-foreclosure or short sale, with deed-in-lieu (DIL) of foreclosure as a second option, according to new FHA guidance. Mortgagee Letter 2014-5 states that the lender must first determine whether the borrower facing default or at risk of default qualifies for a pre-foreclosure sale (PFS). The FHA allows pre-foreclosure sales to be processed as either a “standard PFS” or a “streamline PFS.” The former is available only to owner-occupants while the latter is for both owner- and non-owner-occupied single-family properties. In determining standard PFS eligibility, the lender must use a “deficit income test” to determine whether the borrower is experiencing hardship and is able to sustain his or her mortgage. A DIT resulting in a negative amount would likely qualify the borrower for a ...

New FHA guidance regarding voluntary termination of FHA mortgage insurance does not affect separate guidance requiring borrowers to continue payment of their annual insurance premium regardless of the loan’s amortization terms. The FHA made the clarification in relation to Mortgagee Letter 2014-13, which requires written consents by the lender and the borrower in all voluntary terminations of FHA mortgage insurance. The requirement becomes effective on Oct. 1st this year. Specifically, the guidance requires FHA lenders to document that they have obtained the borrower’s informed consent to terminate FHA insurance on the mortgage. The change ensures that the lender would incur no liability and that the borrower understands the terms of the voluntary termination. Under current rules, the FHA may terminate mortgage insurance at the request of the borrower and the lender. The lender may cancel the insurance endorsement upon notification by the FHA commissioner that the insurance contract is terminated.

One deficiency commonly noted in cases heard by the Department of Housing and Urban Development’s Mortgagee Review Board is failure by FHA lenders and servicers to implement and maintain a quality control (QC) plan. FHA’s focus on quality control has increased over the last couple of years as the agency strives to correct underwriting flaws that have contributed to the massive losses and severe depletion of the Mutual Mortgage Insurance Fund. After years of guiding and helping clients comply and cope with FHA regulations, requirements and enforcement actions, the Collingwood Group reports that a common QC-related mistake among FHA lenders is failure to document steps taken to correct deficiencies – or to take any corrective action at all. Tied to this issue is ...

Same-sex couples are entitled to veteran benefits, including home loan guaranty, if their marriage is recognized by the state where they live or where they lived when they filed a claim for benefits – and not where the marriage took place.The VA made the clarification in the wake of guidance the agency issued regarding the benefits and services same-sex married couples are entitled to under current laws and regulation. On June 26, 2013, the U.S. Supreme Court, in United States v. Windsor, struck down Section 3 of the Defense of Marriage Act (DOMA), which governs the definitions of “marriage” and “spouse” for all federal agencies, because it was unconstitutional. The court held that the provision deprives a person of the right to equal liberty, which is protected by the due process clause of the Fifth Amendment. Prior to the SCOTUS opinion, DOMA defined “marriage” as a ...