New Day USA, an exclusive VA lender, is building up its purchase mortgage-lending platform to help grow its VA business by the end of 2018, according to the firm’s top financial adviser.Based in Fulton, MD, New Day is developing its purchase-lending capability to help grow its overall VA business by 20 to 25 percent annually, said Joseph Murin, New Day’s chairman emeritus. “We’re growing slowly,” he said. “We’d rather walk before we run.” An approved VA lender, New Day’s focus has been almost entirely on cash-out refinancing. New Day currently ranks 21st among Ginnie Mae VA sellers for the first quarter of 2016, according to Inside FHA/VA Lending’s database. The company closed the first quarter with $463.1 million in VA loans, up 22.8 percent from 4Q15 and up a whopping 87.6 percent on a year-over-year basis. “We are spending a lot of time developing and understanding the ...

Eleven lenders paid a total of $152.1 million in civil penalties and settlements while three others lost their FHA approval for various violations of FHA requirements, according to the Mortgagee Review Board’s latest report on administrative actions taken against FHA-approved lenders. As required by the Department of Housing and Urban Development, the report summarizes the disciplinary actions imposed by the board on FHA lenders from Oct. 1, 2014, to Sept. 30, 2015. These actions include $151.7 million in settlements and $370,119 in civil money penalties, withdrawals of FHA approval, suspensions, probations and reprimands. Allied First Bank of Oswego, IL, agreed to pay a $17,000 civil money penalty for improper use of FHA’s name in certain correspondence and for failure to notify HUD of a consent order entered into by the bank and federal and state banking regulators. The MRB voted to ...

A dispute over rule interpretation between the Department of Housing and Urban Development and its inspector general regarding the use of gift funds and premium pricing in downpayment assistance has FHA lenders concerned about potential liability and unnecessary legal costs. Last week, HUD Deputy Secretary/FHA Commissioner Edward Golding sought to allay lender concerns by refuting the IG’s position on lender use of downpayment assistance programs sponsored by state housing finance agencies. In a memo to the industry, Golding upheld...

Wells Fargo and JPMorgan Chase recently launched programs to deliver low-downpayment mortgages to Fannie Mae that differ from the government-sponsored enterprises’ recent expansion into high loan-to-value financing. Both banks introduced new 97 percent LTV programs they believe are easier to use than the GSE initiatives and, for certain borrowers, a better choice than FHA financing. Wells Fargo’s “yourFirstMortgage” requires a minimum of 3 percent downpayment for fixed-rate mortgages. The company will consider FICO scores significantly lower than other similar high-LTV programs, to as low as 620, along with debt-to-income ratios up to 45 percent. Factoring in nontraditional uses of credit such as rent, utility bill payments and tuition is...

The share of new home mortgage originations packaged into MBS drifted slightly lower in the first quarter of 2016, a new Inside MBS & ABS analysis reveals. Some $255.7 billion of newly originated mortgages were pooled in MBS in the first three months of the year, representing a paltry 67.3 percent of the estimated $380 billion of first-lien originations in the primary market. For the purposes of calculating securitization rates, loans aged more than three months and modified loans are excluded from agency MBS issuance figures. Fannie Mae and Freddie Mac securitized...[Includes one data table]

Guild Mortgage vowed to defend itself against government charges that it improperly originated and underwrote mortgages, which later caused millions of dollars in losses to the FHA and taxpayers. In a statement released after the Department of Justice filed its complaint in federal district court in Washington, DC, last week, Mary Ann McGarry, president and chief executive officer of Guild Mortgage, said the government’s action is unwarranted and meritless. “The implication that any default on an FHA loan by a borrower represents wrongdoing by the lender is not justified...

The House this week approved legislation making it easier for loan officers working for depository institutions to go to work for nonbanks. Separately, the Senate last week approved a $39.2 billion fiscal 2017 funding bill for the Department of Housing and Urban Development. By a unanimous voice vote, House lawmakers approved H.R. 2121, the SAFE Transitional Licensing Act. The legislation provides for a 120-day temporary license for registered loan originators who change jobs and makes for an easier transition when moving from a financial institution to a state-licensed nonbank or to another state. Introduced last April by Rep. Steve Stivers, R-OH, the bill would require...

FHA activity was lackluster in the first three months of 2016 as loan originations fell 7.8 percent from the prior quarter, according to Inside FHA/VA Lending’s analysis of agency data. The weak first-quarter production of $53.5 billion appeared to continue a trend from 2015, which saw the fourth quarter close with $58.1 billion, down significantly from $73.7 billion in the third quarter. In contrast, FHA originations fared better year-over year. Loan production was up 35.6 percent in the first quarter compared to the same period last year. Purchase lending totaled $36.5 billion in the first three months with overall production trending downward during the period. Borrowers in the 640-679 and 680-719 credit score ranges made up the bulk of new endorsements for January and February, the latest FHA data show. It is unlikely that trend will change even if March endorsements were added. Between all ... [ 2 charts ]

The rapid deconsolidation in the Ginnie Mae issuer community and shift to nonbanks helped expand access for borrowers, but it’s also given the agency new issues to consider, officials said. Back in 2010-11, three Ginnie issuers dominated the program, noted Ginnie Mae President Ted Tozer during the Mortgage Bankers Association secondary-market conference in New York this week. But those three firms now account for just 14 percent of the agency’s business, and nonbanks held a combined 70 percent of the market, he said. Many new firms became issuers in part so they could get away from the credit overlays imposed by the national aggregators, Tozer said. The result is that the average score on a Ginnie loan is now 60 points lower than on loans securitized by Fannie Mae and Freddie Mac, he added. Michael Drayne, senior vice president in Ginnie’s office of issuer & portfolio management, said the ...

Recent circuit court rulings may bolster FHA lenders’ defense against the government’s heavy use of the False Claims Act in FHA lending cases, according to industry attorneys. In the years following the financial crisis, the Department of Justice and the relators bar have used the FCA aggressively to target banks and nonbank mortgage lenders for losses incurred by FHA due to poor underwriting and false certifications. The DOJ and the Department of Housing and Urban Development have recovered billions of dollars through settlements with various mortgage lenders and servicers, using increasingly creative theories of liability to hold them responsible for FHA losses. This week, the DOJ filed a lawsuit in federal court in Washington, DC, accusing Guild Mortgage of improper origination and underwriting of FHA-insured mortgage loans from January 2006 through December 2011. As in ...