FHA and VA borrowers took on slightly greater payment obligations in 2016 than they have in previous years, according to a new analysis and servicer ranking by Inside FHA/VA Lending. The average debt-to-income ratio for FHA loans securitized in Ginnie Mae mortgage-backed securities last year was 40.4 percent, up about half a percentage point from 2015. The average VA DTI ratio nudged up slightly to 38.3 percent. Average credit scores in the FHA program drifted slightly lower, while climbing 1.9 points for VA loans. The differences in credit quality between the two programs remained substantial: the VA attracts borrowers with higher credit scores and lower DTI ratios who take on larger loans. Some 36.3 percent of VA loans backing Ginnie MBS issued last year had credit scores of 740 and up, while just 13.2 percent of FHA loans fell in that category. Meanwhile, 67.1 percent of FHA loans had ...

Ben Carson is a step closer to being confirmed as secretary of the Department of Housing and Urban Development after Republicans this week invoked cloture to block any attempt by Democrats to delay or prevent a Senate confirmation vote. Republicans filed their cloture motion and waived quorum call on Feb. 13, effectively ending further debate on Carson’s nomination. At least 16 senators must sign a cloture petition.]There has been no date set for Carson’s confirmation vote. The Trump administration has been slow to fill its Cabinet positions, partly due to Democrats’ stalling techniques. So far, only nine cabinet positions have been filled. There has been no Senate action scheduled since the Senate Banking Committee approved Carson confirmation by voice vote on Jan. 24, and nobody seems to have an explanation for the delay. While the committee vote was unanimous, Democrats continue to ...

The spike in FHA delinquencies in the fourth quarter of 2016 justifies the Trump administration’s decision last month to suspend and review the outgoing administration’s lowering of FHA mortgage insurance premiums, said House Financial Services Committee Chairman Jeb Hensarling, R-TX. Commenting on the Mortgage Bankers Association’s quarterly delinquency rate survey, Hensarling praised President Trump’s decision to set aside the 25-basis-point premium reduction, which Inside FHA/VA Lending reported first on Jan. 6, 2017. “Lowering premiums at this time was a big mistake,” said Hensarling. “The sudden increase in delinquencies makes it clear that President Trump was absolutely right to undo the previous administration’s irresponsible action.” Hensarling recalled that in 2013 “taxpayers had to spend $1.7 billion to bail out the FHA.” Going forward, the FHA must be fiscally sound, with a ...

Claims relating to housing and mortgage fraud represented a huge chunk of the amount recovered by the federal government under the False Claims Act last year. An analysis by the WilmerHale law firm found that the Department of Justice continued to give high priority to FCA investigations and prosecutions in 2016, resulting in more than $4.76 billion in settlements and judgments, nearly $1 billion more than in 2015. The increase also reflected a continued focus on financial institutions and the mortgage lending industry, with approximately $1.6 billion in recoveries last year, the law firm said. The DOJ, working on referrals from the Department of Housing and Urban Development’s inspector general, has used the FCA effectively as a tool in prosecuting FHA-related fraud cases against lenders. The DOJ ...

Three federal agencies have announced a joint settlement agreement and consent order with a New York FHA lender and several of its top executives to resolve alleged violations of the Financial Institutions Reform, Recovery and Enforcement Act and the False Claims Act. The U.S. Attorney for the Eastern District of New York, the Office of the Inspector General for the Department of Housing and Urban Development, and the Inspector General of the Federal Deposit Insurance Corp. announced the $1.25 million settlement with Franklin First Financial, Ltd., its Chief Executive Officer Frederick Assini, Chief Operating Officer Christopher Berman, and Andrew Dauro, a manager of the company. The lawsuit alleged that the defendants made illegal payments on behalf of borrowers from February 2009 through March 2010 to keep default rates low so that Franklin First could keep its ...

The Department of Veterans Affairs has issued guidance regarding various aspects of the VA Home Loan program. On Valentine’s Day, the VA sent out a reminder to VA lenders regarding the continued use of the current National Pest Management Association (NPMA) Department of Housing and Urban Development Forms NPMA-99-A and NPMA-99-B. Circular 26-17-07 has instructions for filling out both forms. HUD NPMA-99-A, Subterranean Termite Protection Builder’s Guaranty, is completed and certified by the builder. The licensed pest control company completes the HUD-NPMA-99-B. Also on the same day, the VA announced a new requirement for staff appraisal reviewers (SARs). In 2015, VA released guidance, that established a low-risk and a high-risk appraisal review process. This requires SARs to review the LoanSafe Appraisal Manager product during the issuance of the ...

Private mortgage insurers grew their share of the primary mortgage insurance market during 2016 even though they lost some ground during the second half of the year, according to a new Inside Mortgage Finance ranking and analysis. Private MIs wrote an estimated $270.30 billion of new mortgage insurance last year, a robust 23.1 percent increase from 2015. The main engine was a 24.2 percent increase in traditional, or flow, MI business, coupled with a jump in bulk primary coverage – though such activity totaled just $860.0 million in 2016. Private MIs covered...[Includes three data tables]

The secondary market for bulk agency mortgage servicing rights is beginning to pick up a decent head of steam, but one factor is holding it back from a full-throttle: worries about prepayment speeds. “We’ve had one month of low prepayment numbers,” said Mark Garland, president of MountainView Servicing Group, Denver. “A couple of more months would be better.” According to investment bankers who work the market, although rates have been on a steady climb since the November election – the yield on the benchmark 10-year Treasury is...

Mortgage delinquencies in the fourth quarter of 2016 hit their highest level of the year, erasing declines from the previous quarter, according to the Inside Mortgage Finance Large Servicer Delinquency Index. The foreclosure rate continued to decline, hitting levels last seen in 2007. Among the servicers tracked by the index, the total mortgage delinquency rate was 5.05 percent as of the end of the fourth quarter. The rate was at 5.54 percent at the end of 2015 and declined each quarter until the most recent period. Each delinquency bucket increased...[Includes one data table]

Despite some reports of credit access loosening, it’s harder to get a mortgage today than it was during the housing bubble, according to the Urban Institute. With borrowers being denied at a much higher rate than in the past, lower-credit mortgage applicants are dropping out of the housing market. As access to credit tightened after the financial crisis, many lower-credit applicants were discouraged from applying, the UI study noted. That led to a higher-credit applicant pool, which in turn led to a lower rejection rate. This caused...