The half-percent annual premium reduction the FHA announced recently will likely enable the agency to reclaim the high loan-to-value segment of the mortgage market from Fannie Mae and Freddie Mac, according to analysts. Speaking with some originators that have been looking at the best way to securitize high LTV loans, Deustche Bank securities analysts said the lower FHA annual premium would put pressure on the government-sponsored enterprises to lower the cost of their guarantees. “The grapevine has anticipated for months that [g-fees] have little chance of going up and more chance of going down,” the analysts said. “But the specific risk triggered by the FHA move is that the cost of credit will now drop for high-LTV conventional borrowers.” Even before the FHA policy shift, private mortgage insurers have been pressuring the Federal Housing Finance Agency to ...

Production of loans with a VA guaranty was moderately strong in the third quarter of 2014, thanks to lower rates and increased demand for the no-downpayment loans, according to Inside FHA Lending’s analysis of the latest agency data. A 14.1 percent quarter-to-quarter surge helped the industry end last year’s first nine months with a total of $76.3 billion in VA loans, mostly purchase home mortgages taken out by a younger generation of war veterans. VA streamline refinancing also accounted for a substantial chunk of originations, 19.2 percent. Volume jumped from $19.5 billion in the first quarter of 2014 to $26.5 billion the following quarter. Lenders closed out the third quarter with $30.2 billion. Stanley Middleman, chief executive officer of Freedom Mortgage, said VA lending is on the upswing, driven by low interest rates. He thinks the VA home loan guaranty program has been ... [ 1 chart ]

The FHA has proposed key changes to rules for 203(k) consultants, direct endorsement (DE) underwriters and nonprofit groups that do business with the agency. The changes are part of a draft section, “Doing Business with FHA – Other Participants,” which will be incorporated into the overall Single Family Policy handbook. The draft contains information regarding eligibility, approval and recertification requirements for 203(k) program consultants, direct endorsement (DE) underwriters and nonprofit groups. The FHA posted the draft versions of “Doing Business with FHA – Other Participants in FHA Transactions” and “Quality Control, Oversight and Compliance – Other Participants in FHA Transactions” on its SF Housing Policy Drafting Table for public review and comment. The draft consolidate various existing Department of Housing and Urban Development handbooks, mortgagee letters, housing notices and ...

The Department of Housing and Urban Development has made further clarifications to policy guidance related to the treatment of eligible and ineligible non-borrowing spouses of deceased Home Equity Conversion Mortgage borrowers. According to Mortgagee Letter 2015-02, FHA lenders must identify at application any current non-borrowing spouses and must determine whether they are eligible for protection against “due and payable” requirements that kick in upon the death of the HECM borrower. This protection is a provision in the HECM document requiring that full payment of the entire mortgage be deferred for as long as a non-borrowing spouse continues to meet all the requirements of the provision. Specifically, the eligible, non-borrowing spouse must establish, within 90 days from the death of the HECM borrower, legal ownership or other ongoing legal right to ...

Streamlined FHA refinance volume increased slightly in the third quarter of 2014 as incentives put in place in 2013 continued to attract FHA borrowers, according to an Inside FHA Lending analysis of agency information. Streamlined refi production rose 2.4 percent in the third quarter of last year, closing a nine-month period with $14.2 billion in new loans. A comparison of nine-month FHA-to-FHA refinance activity, however, shows volume falling a hefty 79.6 percent year over year. As of Sept. 30, 2014, streamlined refinances accounted for 14.3 percent of total FHA originations. The FHA announced a revised streamlined refi program in December 2013 to help FHA borrowers with underwater mortgages to refinance without added cost or penalty. The loan does not require an appraisal or verification of job, income or credit. A perfect, three-month payment history is required and ... [ 1 chart ]

Ginnie Mae Allows Rate-Change Dates in HMBS Annual ARM Pools. Ginnie Mae has decided to permit annual adjustable-rate Home Equity Conversion Mortgage pools to contain participations with different interest-rate adjustment dates. The participations in a pool must have the same adjustment date as the individual HECM loans to which they are related and an interest rate that adjusts on annual basis. In addition, participations must have a rate adjustment that will take place within 12 months following the month of pool issuance. This policy change is effective with Jan. 1, 2015, issuances and, thereafter, for both Constant Maturity Treasury and LIBOR index-based loan pools. Rescission Dates for Electronic Signatures/VA Guaranteed Home Loans, SCRA Requirements Extended. The Department of Veterans Affairs has extended the rescission date for ...

First-time homebuyers accounted for close to half of all purchase mortgages in the agency market in 2014, according to a new ranking and analysis by Inside Mortgage Finance. Activity in the sector is also projected to increase, helped by low interest rates, a reduction in FHA premium and the government-sponsored enterprises’ low-downpayment programs. Some $224.35 billion in mortgages to first-time homebuyers were included in agency mortgage-backed securities issued in 2014. The loans accounted for 43.3 percent of all purchase mortgages included in agency MBS during the year. Wells Fargo had...[Includes two data charts]

Analysts are expecting Ginnie Mae prepayments to increase moderately in the wake of last week’s announcement that FHA is reducing its annual mortgage insurance premium by 50 basis points. Specifically, the annual MIP would be lowered 50 bps for 30-year fixed-rate FHA mortgages, although the new charges continue to vary depending on loan-to-value ratio and loan amount. Streamlined refinances of FHA loans endorsed before June 2009 are not covered by the new pricing, nor are 15-year FHA mortgages. The timing of the announcement reflects...

Falling interest rates and a pending cut in FHA insurance premiums are prompting many lenders to prepare for a boost in refinance activity. “Recent-period lows should stimulate strong refinance activity,” said Bard Blackwell, an executive vice president and portfolio business manager at Wells Fargo Home Mortgage. He noted that low yields on 10-year Treasury notes have helped to decrease interest rates on mortgages in recent months. As of press time, the yield on 10-year Treasuries fell...

Now that the hurrahs and uproar over FHA’s reduced annual premiums have died down, analysts are having mixed views regarding its short- and long-term effects on private mortgage insurers. Some analysts predict FHA’s 50 basis-point reduction of the annual mortgage insurance premium charged on 30-year forward loans should have a modest impact on private MI business. The cut should benefit the lower FICO brackets – borrowers with credit scores of 679 and lower – a segment in which private MIs write little business, they suggest. “We believe...