Private mortgage insurers saw spirited competition in 2015, both within their own ranks and against a surge in government-insured products, especially the FHA program, according to a new market analysis and ranking by Inside Mortgage Finance. Private MIs wrote coverage on an estimated $219.64 billion in mortgage originations last year, a 23.2 percent increase from 2014. The estimate includes $315 million in coverage on Home Affordable Refinance Program loans provided by the three MIs in run-off mode. The private MI business surge included...[Includes three data tables]

Top officials of the Department of Housing and Urban Development have explicitly ruled out lower FHA premiums or making other significant changes in the program any time soon. Testifying before a House Financial Services subcommittee late last week, FHA Commissioner Edward Golding did not provide any updated guidance on mortgage insurance premiums but made clear there are no plans to revise FHA’s current life-of-loan policy. Under the existing FHA policy, borrowers are required...

The House of Representatives last week passed legislation containing a provision to eliminate the cap on VA loan guaranty limits. Sponsored by Rep. Brad Wenstrup, R-OH, the “Veterans Employment, Education, and Healthcare Improvement Act,” H.R. 3016, included an amendment added by Rep. Lee Zeldin, R-NY, in committee. The amendment would eliminate the maximum loan amount the VA will guarantee, allowing more veterans to purchase homes in high-cost areas such as San Francisco and San Jose, CA. The bill was agreed to...

FHA forward mortgage endorsements fell significantly in the fourth quarter of 2015 with a decline in purchase mortgages and an even bigger drop in refinance loans due to rising interest rates, according to an Inside FHA/VA Lending analysis of agency data. Total FHA production fell 22.2 percent from the third quarter to $58.1 billion in the fourth quarter, spurred by steep declines in purchase originations (down 21.5 percent) and refis (30.0 percent). Fixed and adjustable-rate mortgages also saw their volumes drop by 22.1 percent and 30.2 percent, respectively, during the same period. The percentage of conventional loans that refinanced into FHA loans decreased slightly. FHA baseline lending (loans below $417,000) also declined by 22.0 percent quarter-to-quarter, as did FHA conforming jumbos (loan amounts up to the statutory high-cost loan limit), which saw volume drop 24.4 percent in the fourth quarter. FHA jumbos exceeding $625,500 did not escape the carnage as production fell ...

Nonbanks now rule the top echelon of FHA lenders with one major bank left in a sector once ruled by large banks. That lone bank is Wells Fargo, clinging hard and fast to its number-two spot among the top 10 FHA lenders in 2015. Wells Fargo, which recently agreed in principle to pay $1.2 billion to resolve FHA-related civil claims, ended 2015 with $6.3 billion in total FHA originations, up from $5.1 billion in the prior year. Gone from the top lender ranking is Bank of America, which in 2014 ranked fifth with total originations of $1.7 billion. Currently, BofA is 22nd in the ranking with $1.4 billion in FHA loans made last year. Also gone from the elite ranking is JPMorgan Chase Bank, which in 2014 was sixth with $1.7 billion in total originations. Data indicate that the bank has been gradually pulling back its FHA lending over the past year and has now dropped to number 159 in the ... [1 chart]

Sellers delivered $35. 2 billion in VA loans into Ginnie Mae pools in the fourth quarter of 2015, down 15.0 percent from the previous quarter, according to Inside FHA/VA Lending’s analysis of Ginnie loan-level data. Retail lenders and correspondents accounted for the bulk of VA loans securitized during the quarter. Retail accounted for 45.8 percent of VA purchase loans, enjoying a slight edge over correspondents, which comprised 45.5 percent of securitized VA loans. The broker share of securitized VA purchase loans was 8.7 percent, down 21.2 percent from the third quarter. Meanwhile, retail accounted for 53.8 percent of Ginnie mortgage-backed securities backed by VA refinance loans in the fourth quarter, while correspondents’ share was down to 28.5 percent. The broker channel accounted for 17.7 percent of VA loans securitized during the period. The average FICO score on Ginnie VA loans in the ... [1 chart]

The FHA Mutual Mortgage Insurance Fund is projected to generate $9.1 billion in profits in FY 2017 but officials say they will not be reducing mortgage insurance premiums any time soon. Released this week, the White House’s proposed budget projects FHA will insure $204 billion in new forward, single-family mortgages with a negative credit subsidy of 4.42 percent for each loan, resulting in a projected profit of $9.1 billion. In fiscal 2016, the program is expected to generate $7.7 billion in profits. Separately, for the Home Equity Conversion Mortgage program, the proposed budget is projecting $18.5 billion in new reverse mortgage loans with a negative credit rate of 0.33 percent, netting $61 million in profits. During a budget briefing, Housing and Urban Development Secretary Julian Castro said there are no plans to change the current mortgage insurance premium. “We want to ensure our ...

The Mortgage Bankers Association and the National Association of Realtors have recommended policy changes the VA Home Loan Guaranty program could adopt to make it work better for veteran borrowers. The two industry groups offered their recommendations during a hearing before the House Committee on Veterans Affairs, Subcommittee on Economic Opportunity on the VA program. Testifying on behalf of the MBA, James Danis, president of Residential Mortgage Corp., urged the VA to issue a clear, final qualified mortgage rule for VA lending. The agency has had an interim final rule on QM and ability to repay in place since May 9, 2014, when it was published in the Federal Register. The VA recently issued guidance for lenders to better understand the standards but gave no indication as to when a final rule will be released. Danis recommended that the final rule provide an ample implementation period to ...

On Jan. 20, the Department of Veterans Affairs published a Frequently-Asked-Questions (FAQ) guide to its qualified mortgage interim final Rule. We are picking up from where we left off last issue: Will VA still guaranty the loan if the Interest rate Reduction Refinance Loan (IRRRL) does not meet the recoupment period of less than 36 months, or does not meet the six-month seasoning requirements? Yes, VA will guaranty the loan. However, the loan will not have a safe harbor QM status. Instead, it will be a rebuttable presumption QM. VA does not condition the guaranty on satisfaction of all of the QM requirements. Lenders should consult their legal staff regarding safe harbor and rebuttal presumption QMs. What is the date that begins the seasoning and recoupment periods? The date of the note is the date on which legal obligations are established between borrower and lender. Therefore, to calculate the ...

While they are effective, the VA’s Frequently-Asked-Questions on the qualified mortgage interim final rule provide helpful guidance on certain aspects of Interest Rate Reduction Refinance Loans (IRRRLs) origination as they relate to the VA QM rule, according to an analysis by the Washington, DC, law firm K&L Gates. The intricacies of IRRRL treatment under the interim final rule suggest the product may continue to be subject to ambiguities disproportionate to its limited role in the mortgage marketplace, wrote authors Kristie Kully and Eric Mitzenmacher, attorneys with the firm. VA’s interim final rule provides that all VA loans are QMs. The authors note that while most VA loans are safe harbor QMs under the rule, certain streamlined refinance loans (IRRRLs) are entitled only to a rebuttable presumption. Under the VA interim final rule, an IRRRL is deemed to have safe harbor QM status if the ...