The Department of Housing and Urban Development has updated the timelines and methods servicers must follow for communicating with borrowers in default. Mortgagee Letter 2013-39 also addresses policies for engaging borrowers early in their delinquencies, specialized collection techniques for early-payment defaults or re-default, and FHA’s expectation for servicers to have written processes and procedures to follow for every stage of delinquency up to collection. Communicating early with borrowers who are late in their mortgage payments is essential in ensuring that delinquency is properly addressed, the agency said. HUD’s latest guidance provides a “collection-communication timeline,” which is a series of sequential steps a servicer can follow in dealing with a delinquent borrower. These steps would help the servicer assess a borrower’s circumstances, intentions and financial condition as well as determine an appropriate response.

Ginnie Mae issuers reported a 14.0 percent drop in mortgage-backed securities issuances in the third quarter from the previous quarter as refinance activity declined further and home-purchase lending slowed during the period, according to an Inside FHA Lending analysis of Ginnie Mae data. Despite the quarter-over-quarter drop, Ginnie production rose 11.2 percent in the first nine months of 2013. Volume over this period totaled $313.8 million, of which 60.3 percent were FHA loans, 33.9 percent were VA, and 5.2 percent were rural housing loans. Ginnie MBS issuance dropped gradually ... [2 charts]

During the third quarter of 2013, for the first time since the middle of 2008, private mortgage insurers edged past the government-insurance programs to become the biggest source of primary MI coverage in the market, according to a new ranking and analysis by Inside Mortgage Finance. Private MIs provided primary coverage on $59.03 billion of newly originated mortgages during the third quarter. That was down 3.2 percent from the second quarter, but the FHA and VA programs posted even bigger declines of 17.5 percent and 10.6 percent, respectively. That gave the private MI sector a 39.4 percent share of new primary coverage, its highest level since the second quarter of 2008. The last time private MIs did...[Includes three data charts]

A trio of industry groups is calling upon the Consumer Financial Protection Bureau to make sure there is adequate testing of the pending mortgage-origination disclosure forms expected to be released within the next few weeks. In a letter to CFPB Director Richard Cordray, the American Escrow Association, the American Financial Services Association and the Consumer Mortgage Coalition said they strongly support testing the forms before they are put into use. “There are a large number of mortgage loan products in the marketplace, and the rounds of forms the CFPB has released and tested do not accommodate all of them,” the groups said. The forms that have been released so far won’t work...

Mortgage delinquency rates reached a five-year low during the third quarter of 2013, according to the Inside Mortgage Finance Large Servicer Delinquency Index. A group of 19 lenders that serviced $5.33 trillion of home loans reported that just 6.78 percent of those loans were in some stage of delinquency or default. That figure, which is not seasonally adjusted, was the lowest rate in the index since the third quarter of 2008. The overall delinquency rate improved...[Includes one data chart]

While the Department of Housing and Urban Development’s proposed definition of a “qualified mortgage” is superior to the treatment FHA-insured mortgage loans would receive under the Consumer Financial Protection Bureau’s QM rule, it would add significant regulatory burden and costs and increase litigation risks, warned mortgage lenders. HUD’s proposed distinction between safe harbor and rebuttable presumption loans is unnecessary for FHA loans because they already meet QM requirements, according to industry trade groups. Rebuttable presumption would only impose more costs and reduce credit availability for borrowers who need FHA credit the most and likely create more confusion, lenders said. The inclusion of the FHA annual mortgage insurance premium (MIP) in the annual percentage calculation under the CFPB rule would cause...

Ginnie Mae remains a very good profit center for MBS issuers and investors, making government-backed lending appealing and beneficial to consumers, according to securitization experts. Government loans offer great value to lenders because they cover broader borrower eligibility than conventional loan products and lenders can execute more efficiently, said panelists at the Mortgage Bankers Association’s annual conference this week. The discussion focused on government loan programs – FHA, VA and Rural Housing Service – and on execution options for the loans and their mortgage servicing rights (MSRs). CMG Financial has found...

Financial industry trade groups want all Title II forward mortgage loans that meet FHA requirements to be treated as “safe harbor” qualified mortgage loans instead of being lumped in either of two QM buckets as proposed by the Department of Housing and Urban Development. Commenting on HUD’s proposed definition of a “qualified mortgage,” the industry groups – Mortgage Bankers Association, Consumer Bankers Association, Consumer Mortgage Coalition, American Bankers Association, and the Independent Community Bankers of America – urged HUD to ...

Proposed options for adjusting FHA products, market presence and powers could have a direct effect on the availability of credit for borrowers and on the FHA’s ability to respond to changing market conditions, according to a new study by the Government Accountability Office. In certain instances, the recommended changes would entail tradeoffs – a downside for every upside. Industry participants, researchers and the FHA have suggested these options to improve FHA’s long-term viability or for shrinking the agency’s footprint in the mortgage market. The GAO undertook the study to determine ...

Establishing a higher, mandatory capital reserve requirement for the FHA under the Protecting American Taxpayers and Homeowners Act, or PATH Act, would help reduce discretionary spending over 10 years, according to the Congressional Budget Office. According to CBO estimates, implementing the legislation would result in a net decrease in discretionary spending of $41.2 billion over the 2014-2023 period. This assumes future appropriations laws are enacted to implement the act’s provisions. The potential reduction in government spending would stem from ...