Approximately 48 percent of FHA loans that underwent post-endorsement review by the FHA in the third quarter of 2013 received an “unacceptable” rating – a commonly high percentage of deficient FHA-insured loans that lenders could lower through mitigation. The FHA reviewed 6,692 FHA-insured loans between July 1 and Sept. 30, 70 percent of which were home-purchase loans, 25 percent streamline refinancings, and 5 percent rate and term refis. Of the total loans analyzed, 36 percent had certain deficiencies, 19 percent showed early payment default (EPD), and only 16 percent met FHA underwriting standards, according to the agency’s latest report on loan-file review findings.

FHA and VA loans backing Ginnie Mae pools in 2013 showed an average mid-range FICO score of 693, lower debt-to-income ratio and an average loan size of $187,268, confirming strict underwriting in both government programs, according to an Inside FHA Lending analysis of Ginnie Mae loan-level disclosures. Issuers securitized $370.4 billion of mortgages with first payment date in 2013 through November. Loan characteristics exclude loans with no information reported.

The Department of Housing and Urban Development has delayed the implementation of a new requirement to assess the financial condition of borrowers seeking a Home Equity Conversion Mortgage loan, which was to take effect on Jan. 13. HUD’s decision to delay responds to an industry concern that the initial effective date does not give lenders sufficient time to customize appropriate software, hire and train new underwriters and complete other critical implementation tasks. It would take at least three months to do all these things, lenders said.

Analysts forecast uncertainty for the agency MBS market going into 2014 as the policy landscape reshapes itself and investors cautiously adapt to the shape of things to come. Look for 2014 to be a “year of transition” amid a slowly rising range of U.S. Treasury yields, a slowly recovering economy, and a Federal Reserve that transitions away from quantitative easing toward forward guidance, according to RBS analysts. RBS noted...

PNC Financial Services will pay Freddie Mac $89 million to put to bed all buyback liabilities on home loans sold to the GSE in the years leading up to the mortgage-market meltdown, the lender announced earlier this month. The settlement resolves certain PNC repurchase obligations for both existing and future claims for approximately 900,000 loans that were sold to Freddie between 2000 and 2008. The $89 million payout, less credits of $8 million, will also be used to compensate Freddie for any losses that the GSE incurred in the past or any other losses that may result in the future, said PNC.

After ending fiscal year 2012 at a negative $16.3 billion, the FHA’s mutual mortgage insurance fund is close to being in the black, according to an independent actuarial report released late last week. The FHA noted that it has shifted its focus from shoring up the MMIF to reducing lenders’ underwriting overlays and targeting poorly performing servicers. The net worth of the MMIF at the end of fiscal year 2013 was negative $1.3 billion, according to the report, due to pricing and policy changes by the Department of Housing and Urban Development along with improvements to the economy. The capital reserve ratio for the MMIF also improved from negative 1.44 percent at the end of fiscal 2012 to negative 0.11 percent at the end of fiscal 2013. HUD Secretary Shaun Donovan noted...

The top Democrat and Republican on the Senate Banking, Housing and Urban Affairs Committee acknowledged this week they will not make their ambitious deadline of clearing a housing-finance reform bill by the end of this year. But the senior lawmakers said they remain “bullish” on moving legislation to the Senate floor sooner rather than later in 2014. Speaking at a Bipartisan Policy Center event, Committee Chairman Tim Johnson, D-SD, blamed “a couple of curveballs,” including the 16-day government shutdown, for falling short of the deadline he and Idaho Republican Mike Crapo set for the committee. The committee did manage to hold 12 hearings on reform and what to do with the two government-sponsored enterprises that have been in conservatorship for a little over five years. “Beyond private capital, we are also working...

Severe decreases in the FHA loan limits in numerous counties across the country have spurred industry demand for the Department of Housing and Urban Development to disclose the methodology and process it used to determine the new loan limits. Although HUD’s announcement of lower FHA loan limits for 2014 had been long expected, mortgage industry participants were caught off guard by the substantial reductions in FHA loan limits caused by the statutory change in how the limits are calculated and by revised median house prices. For 2014, HUD announced that the national ceiling limit for single-family mortgages in high-cost areas would decline to ... [1 chart]

Policy changes implemented since 2009 appear to be having a positive impact on the FHA Mutual Mortgage Insurance Fund, which is still $1.3 billion in the red, but its net worth grew $15 billion over last year’s estimate, according to the latest independent actuarial audit of the FHA fund. The MMI Fund’s economic value improved from negative $16.3 billion last year to negative $1.3 billion. Its capital reserve ratio, which has been a cause of disagreement among lawmakers and industry players, also rose from negative ...

With one week left on Congress’ calendar year, Senate approval of S. 1376, the FHA Solvency Act of 2013, before the end of 2013 is becoming more unlikely, according to lobbyists. The bill is stalled and is unlikely to be brought to the floor any time soon. If the housing sector continues to improve, the government-sponsored enterprises continue to generate profit and the FHA’s newer books of business continue to perform well, passing GSE or FHA reform legislation next year would be an uphill battle, lobbyists said. The Congressional Budget Office estimates that implementing S. 1376 would result in ...