The initial material defect rate on sampled FHA loans targeted for a post-endorsement technical review was down in the fourth quarter of 2016 from the previous quarter, according to the FHA’s latest quarterly loan review update. FHA’s Lending Insight reports the material defect rate prior to curing fell to 49 percent in 4Q16 from 53 percent in the previous quarter, based on an analysis of 5,267 sampled FHA loans endorsed between Oct. 1, 2016, and Dec. 31, 2016. Of the loans sampled, 75 percent were purchase-money mortgages; 10 percent were streamlined refinances; 7 percent rate and term refinances, and 8 percent, Home Equity Conversion Mortgage loans. Twenty percent of the sample, 1,081 loans, were conforming while 25 percent, or 1,313 loans, were found to be defective. About 13 percent of the loans were denied endorsement. On the other hand, approximately 41 percent of loans ...

The Trump White House has yet to fill key positions at the Department of Housing and Urban Development and agencies that fall under the HUD umbrella, including the FHA and Ginnie Mae. According to industry officials who claim to have some knowledge of the process, the administration is seriously considering Pam Patenaude to be the deputy HUD secretary. Patenaude is president of the J. Ronald Terwilliger Foundation for Housing America’s Families. She served as HUD assistant secretary for community, planning and development during the George W. Bush administration. Meanwhile, Michael Bright has been mentioned as a candidate to be the next president of Ginnie Mae. Bright currently serves as director, Center for Financial Markets at the Milken Institute. During his career he has worked for mortgage lender/servicer PennyMac, investment banking firm BlackRock and ...

Judgment Imposed on Former President and Founder of Loan Correspondent Firm. A federal court in Chicago ordered the former president and founder of MDR Mortgage of Palatine, IL, to pay more than $10 million to the Department of Housing and Urban Development for submitting false certifications on FHA loans. The HUD Inspector General Office and the Department of Justice withheld the identity of the former bank official, who was found liable under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act. The violations allegedly involved loans the FHA insured from 2006 through August 7, 2008, the period during which MDR submitted the allegedly false certifications. The DOJ identified 237 loans that MDR processed during the period in question. The loans defaulted and resulted in $3.4 million in claims paid by the FHA. In addition, MDR provided annual verifications to ...

Residential loan production picked up steam in March after a tepid January and February, while originators – both banks and nonbanks alike – kept a close eye on expenses in an effort to maintain positive cash flow. Bill Dallas, CEO and president of Skyline Home Loans, Calabasas, CA, said his company funded $650 million in the first quarter, a modest 5.8 percent decline from the same period a year ago. Roughly 75 percent of Skyline’s production was purchase loans, the exact opposite of what the company did in the year-ago quarter. “Over the past five months, since the election, the landscape has been...

Most lenders are usually shy when asked whether they would like to go public. But not Better Mortgage, a barely one-year-old “digital” mortgage lender that could triple loan production this year to $1.5 billion. “Yes, we’d like to go public,” company founder and CEO Vishal Garg told Inside MortgageFinance. “This company should be owned by the public.” As for when, that’s a different matter. The last time a nonbank mortgage lender sold...

FHA-insured jumbo lending fell slightly in the fourth quarter of 2016 although year-over-year results were a lot better. Production of conforming-jumbo purchase and refinance loans insured by the FHA slipped 0.9 percent in the fourth quarter, a slight bump on the way to an annual jumbo origination total of $26.9billion. Year-over-year, FHA jumbo production was up 5.6 percent from 2015. Conforming-jumbo loans represented 9.8 percent of FHA loans securitized last year, according to data compiled by affiliated newsletter Inside Mortgage Finance. Purchase mortgages comprised 64.9 percent of jumbo loans insured by FHA in 2016 and 98.7 percent were fixed-rate loans. Nonbanks comprised the top five FHA jumbo lenders. Wells Fargo, which closed the year with $423.8 million in FHA jumbo originations, was in sixth place. Quicken Loans led the field with $802.5 million of ... [ Charts ]

The Department of Veterans Affairs and mortgage industry stakeholders are working to resolve the churning problem in the VA Home Loan Guaranty program. It appears the agency is unhappy that Ginnie Mae’s recent pooling policy change was only partially effective in discouraging early solicitation of VA purchase loans for refinancing. Apparently, the practice is continuing and is adversely affecting mortgage-backed securities investors who are not getting full return on their investments. The Mortgage Bankers Association said a handful of lenders and mortgage brokers are still engaging in serial refinancing of VA purchase loans within six months of closing, causing faster prepayments in Ginnie MBS pools. Ginnie announced a policy change, which took effect on Feb. 1, 2017, clarifying that streamline refinance loans may be delivered into Ginnie MBS pools only if, at the ...

More than 11 percent of FHA servicing outstanding was delinquent in 2016, mostly in the 30-60 day categories, with banks dominating the FHA servicing market. An estimated 7.77 million FHA loans are currently being serviced, of which 6.93 percent were 30 to 60 days behind on their monthly payments at the end of last year, according to an Inside FHA/VA Lending analysis of FHA servicing data. Seriously delinquent loans (90-days plus overdue) accounted for 4.90 percent of all FHA loans outstanding. FHA delinquencies spiked in the fourth quarter of 2016, primarily in the 30-day category, which increased 55 basis points over the period. On the other hand, overall FHA delinquencies remained flat year-over-year. Banks comprised four of the top five FHA servicers. They are, in sequential order, Wells Fargo, JPMorgan Chase, Cenlar FSB, and US Bank. PennyMac, in fifth place, is the ... [Charts ]

The Mortgage Bankers Association is urging Housing and Urban Development Secretary Ben Carson to rescind current guidance and prohibit future FHA financing of properties encumbered by a Property Assessed Clean Energy (PACE) tax lien. The guidance, which the Department of Housing and Urban Development implemented in July last year, should be eliminated unless the PACE lien is clearly subordinated to the FHA loan and national, standardized consumer protections are in place, the MBA said. The MBA said it has significant concerns with the risk posed by PACE financing to traditional lien priority and the FHA, as well as the lack of consumer protections. “Unfortunately, [current PACE guidance] does not reduce these concerns – it amplifies them,” the letter warned. PACE loans were developed to help finance energy-efficient retrofits, such as solar panels, energy-saving appliances and ...

The FHA will implement its new Loan Review System that features a defect taxonomy on May 15, 2017. The new system is designed to reduce potential lender liability when FHA loans go into default. The LRS will be used to manage FHA single-family loan and monitoring reviews as well as lender self-reporting of fraud, misrepresentation and other material findings. A change in the pre-endorsement loan review period from pre-closing to post-closing will also become effective on May 15. Scrutinizing loans after they close prior to endorsement for FHA insurance would ensure that loans have no material defects or material errors that could expose the lender to enforcement action or false-claim litigation and the likelihood of a hefty settlement. The defect taxonomy will help lenders identify and classify loan-level defects uncovered through individual loan reviews. Material loan defects have been narrowed down to ...