Recent data on the state of the FHA’s Mutual Mortgage Insurance Fund and program financials suggest that the annual audit will show solid improvement in the government’s 2016 fiscal year, which ended Sept. 30. But there are some huge variables that could have a major impact on the final results that won’t be known until the annual audit is released late next month. The MMIF ended...

Two FHA lenders in Utah have agreed to pay the federal government a total of $9.25 million to resolve allegations they violated the False Claims Act in connection with badly underwritten FHA-insured loans that later resulted in losses to the FHA insurance fund. Primary Residential Mortgage Inc. (PRMI) and SecurityNational Mortgage Co. became the latest statistics in the government’s effort to prosecute lenders whose practices result in losses to the FHA insurance fund. The two lenders have agreed separately to $5.0 million and $4.25 million settlements, respectively, without admitting to any fault or liability for the failed loans. In separate complaints, the Department of Justice accused...

Ginnie Mae set new monthly and quarterly production records during the third quarter of 2016, leading the agency MBS market to a huge 24.6 percent increase in new issuance, according to a new market analysis and ranking by Inside MBS & ABS. The three agencies produced $428.36 billion in new single-family MBS during the third quarter. Fannie Mae and Freddie Mac actually had bigger increases from the second quarter, but Ginnie was the star of the show. Ginnie recorded...[Includes two data tables]

Ginnie Mae rode a surging purchase-mortgage market and heavy refinance activity to new production records during the third quarter of 2016. The agency issued a whopping $145.14 billion of single-family mortgage-backed securities during the third quarter, according to an Inside FHA/VA Lending analysis of MBS disclosures. That figure is based on pool-level disclosures that reveal exact principal balance amounts and it includes securities backed by FHA home-equity conversion mortgages. The data in the table below are based on truncated loan-level disclosures and do not include HECM activity. New Ginnie MBS issuance in the third quarter was up 15.7 percent from the previous quarter. Ginnie MBS production set three consecutive monthly records during the third quarter, culminating in a huge $52.46 billion month in September. Purchase-mortgage activity was the key driver, but the ... [ 4 charts ]

Requiring an undercapitalized issuer to repurchase uninsured performing mortgages out of a mortgage-backed securities pool could increase risk to the federal government, warned Ginnie Mae. Responding to an adverse audit report from the Department of Housing and Urban Development’s Office of the Inspector General, Ginnie said that while it generally accepts the IG’s recommendations, forcing an undercapitalized issuer to buy out performing loans and either hold them in portfolio or sell them at a substantial loss would put the government at greater risk. “This is something we need to be alert to in certain cases,” the agency said. According to the report, Ginnie improperly allowed more than $49 million of single-family mortgages with terminated insurance to remain in its MBS pools for more than one year without obtaining FHA coverage. The IG warned Ginnie could be on the ...

Lenders are optimistic about a proposed rule that would reinstate FHA spot financing in unapproved condominium projects, saying this could be the spark that would jump-start the slow condo market.The proposed rules would clarify and modify certain FHA rules to kick-start condominium lending activity, and allow some flexibility in existing approval standards. Key proposals include the reinstatement of spot approvals in unapproved condominium developments and extending the effective recertification period for condo approvals to three years, rather than the current two-year requirement. Prior to 2009, spot approval allowed a buyer to use FHA financing to purchase a unit in an unapproved condo project, but the HUD approval process was expensive and time consuming. Consequently, few lenders were able to take advantage of the spot-approval program. The Department of ...

Industry groups are urging the Department of Housing and Urban Development to reconsider a supplemental proposal to require mortgagees to assign a Home Equity Conversion Mortgage loan to the FHA once the loan balance reaches 98 percent of the maximum claim amount (MCA). The Mortgage Bankers Association and the National Reverse Mortgage Lenders Association said there are more disadvantages than benefits to the proposal. The supplemental proposal is an offshoot from a previous HUD proposed rule to codify significant changes made to the HECM program by the Housing and Economic Recovery Act of 2008, the Reverse Mortgage Stabilization Act of 2013 and all other revisions in between. Both groups recommended that HUD maintain its current assignment election options rather than adopt the proposed rule. Currently, mortgagees have an option, before the ...

The initial material defect rate of FHA loans has increased to 50 percent in the third quarter of 2016 from the previous quarter, according to the latest FHA Lender Insight report on quality control. A good portion of the defective mortgage loans, however, has been mitigated during the post-endorsement technical review process, the report indicated. In the second quarter, the initial material defect rate had been flat, averaging 47.4 percent over the last eight quarters. The latest report show the top five mitigated findings, which reflect the number of initially unacceptable ratings and the number of findings mitigated for loans between April and June, 2016. Some 6,312 FHA loans comprised the sample, and they consisted of purchase loans (71.0 percent), streamline refinance (13.5 percent), rate and term refis (9.0 percent), and Home Equity Conversion Mortgages (6.7 percent). In addition, ...

The Department of Veterans Affairs is urging VA lenders, borrowers and other participants in its loan guaranty program to adopt recommended standards, equipment and activities to reduce water and energy usage and to ease the impact of natural disasters. The VA has recommended wind-hazard standards, resilient building and retrofitting standards, a water- and energy-saving program, and property-and-energy conservation strategies to help VA borrowers protect their homes against storms, flooding, earthquakes and other calamities. VA made clear it allows, but does not require, any of the recommended standards, strategies or equipment. The programs are strictly voluntary, it said. The agency noted the increasing incidence of extreme weather events, earthquakes and flooding, which makes planning and building in the most resilient and economically feasible ways all the ...

The Department of Veterans Affairs adopted without change its interim final rule increasing the maximum amount of civil fines it can assess on lenders and other offenders for violations of agency loan-guaranty rules and regulations. Under the interim final rule VA issued for comment back in June, maximum civil monetary penalties would increase from $10,000 to $21,563 for false loan-guaranty certifications. Civil fines for fraudulent claims or statements in any VA program would increase from $5,500 to $10,781. The VA published the interim final rule on June 22, 2016, to implement the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 and to improve the effectiveness of civil fines and maintain their deterrent effect. The new penalty amounts became ...