The Department of Housing and Urban Development said it would work with Congress to strengthen the FHA and Ginnie Mae in a way that protects taxpayers and facilitates the return of private capital despite its mixed views of a Republican draft bill to reform the two programs. Assistant Secretary for Housing and FHA Commissioner Carol Galante told members of the House Financial Services Subcommittee on Insurance, Housing and Economic Opportunity last week that HUD is willing to work with lawmakers to increase access to credit and strengthen risk management and lender enforcement. But while the GOP draft bill contained elements similar to...

A Senate lawmaker and the Mortgage Bankers Association warned House lawmakers that a narrow “qualified residential mortgage” rule will result in overuse of the FHA program and make it more difficult for private capital to re-enter the housing finance market. Testifying before the House Financial Services Subcommittee on Insurance, Housing and Economic Opportunity last week, Sen. Johnny Isakson, R-GA, said the six federal agencies charged with crafting risk-retention requirements apparently failed to consider the impact of a narrow QRM rule on the FHA program. Isakson, who co-authored a Senate exception to...

Private investors in agency MBS could lose $13 billion to $15 billion from a new government effort to help current Fannie Mae, Freddie Mac and FHA borrowers refinance, according to a new Congressional Budget Office staff working paper. The Obama administration is expected to announce a revved-up refinance program as part of a new strategy to strengthen economic growth. A “stylized” refinance program analyzed by the CBO would have a relatively small impact on the overall economy, the analysts said. The biggest impact would be on private MBS investors and the estimated 2.9 million households that would likely be brought into the...

The Department of Housing and Urban Development is urging Congress not to raise the minimum downpayment on FHA mortgage loans, saying that downpayments are not the best indicator of loan defaults. Testifying before the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity, Acting Assistant Secretary for Housing/FHA Commissioner Carol Galante warned that a legislative proposal to raise FHA’s minimum downpayment requirement to 5 percent would forestall recovery in the housing market and restrict access to credit for worthy borrowers. Galante said HUD has not made any determination as to ...

The Department of Housing and Urban Development is pondering its next move after discussing with mortgage industry representatives their concerns about extending the current forbearance period for unemployed homeowners to a maximum of 12 months. HUD and FHA officials met recently with the Mortgage Bankers Association and several small mortgage servicers, which took issue with FHA’s recently revised forbearance policy. HUD declined to discuss the outcome of the meeting, saying it was more about understanding the industry’s concerns and discussing solutions. “No decision has been made as to whether we can or will make any changes, but we are looking into the issues they have raised,” said a HUD spokesman. On July 7, the FHA announced ...

Losses on re-performing FHA/VA mortgage pools are expected to rise as servicers cut back on the claims they submit to the Department of Housing and Urban Development and pass on to mortgage securitization trusts instead, according to a recent analysis by Moody’s Investors Service. With FHA experiencing increasing losses in its portfolio, HUD is scrutinizing claims more vigorously for servicing or underwriting defects, which may serve as a basis for denying claims on re-performing FHA/VA pools. Servicers are also required to bring the property to an acceptable conveyance condition. Furthermore, HUD imposes very strict timeline guidelines that FHA servicers must follow. Given the recent servicing irregularities and staffing constraints due to rising defaults, servicers may not always ...

FHA lending continued its downward trend as total originations fell 9.5 percent in July from the previous month and a whopping 41.2 percent on a year-to-year basis, according to Inside FHA Lending’s analysis of the latest data. The market saw production drop to $14.8 billion in July from $16.3 billion on a monthly basis and from $25.1 billion the same period last year. Fixed-rate mortgages comprised the bulk of originations at 93.7 percent, while purchase mortgages accounted for 78.5 percent of loans endorsed for FHA insurance for the month of July. In addition, 79.3 percent of FHA-insured loans were originated ... {includes one data chart]

Government-insured mortgage programs held up a little better than the overall market during the second quarter of 2011, edging back toward the higher market shares they recorded in late 2009 and early last year, according to a new analysis and ranking by Inside Mortgage Finance. FHA and VA lending accounted for 27.2 percent of new loan originations in the second quarter, despite a 5.3 percent drop in volume. That represented the highest market penetration for the government programs since early 2010, when they accounted for 28.8 percent of new originations. The all-time high market share for FHA and VA was back in the fourth quarter of 2008, at... [Includes two data charts]

Despite a continuing glut of distressed properties in the housing market, investors have started dialing back their purchase activity. And the primary reason appears to be a shifting business model that is forcing investors – at least for the time being – to rent rather than flip properties. That’s one of the major findings of the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, which found that the investor share of home purchase transactions slipped to 19.6 percent in July. That was not only down from 21.3 percent in June but also the lowest investor market share recorded in a year. The inability of most investors to...

Experts agree that the federal government plays too big a role in the housing market, but panelists at a Federal Reserve conference last week said there is little consensus on how to fix it. FHA is “not our silver bullet,” observed Janis Bowdler, a director at the National Council of La Raza. “Surely, it’s stepping in while we are in a tight credit market. But it’s no long-term solution.” One problem with FHA is that lenders aren’t required to offer it, which means entire communities are left “credit-starved,” Bowdler said. “This leaves them in the same vulnerable position to predatory lenders that they were in five or six or 10 years ago,” she...