Home Equity Conversion Mortgage originations fell dramatically in the second quarter, raising the possibility of a long reverse-mortgage winter in 2018, according to an Inside FHA/VA Lending analysis of HECM data. HECM production fell a whopping 40.9 percent in the second quarter from the previous period. Total HECM originations stood at $8.6 billion by the six-month mark, down 8.3 percent from the prior year. Traditional HECMs, which exclude purchases and refinances, accounted for 80.5 percent of FHA-insured reverse mortgages originated during the first half of 2018. The amount of funds available at loan origination for the first six months totaled $4.7 billion. Analysts blame the low HECM originations on the new lower Principal Limit Factors (PLFs) for HECMs, which became effective in FY 2018. Under the HECM final rule issued last year by the Department of Housing and Urban Development, principal limits [Chart]

Loans originated in the retail channel and delivered into agency mortgage-backed securities continued to show a lower risk profile than mortgages acquired from correspondent originators or funded through mortgage brokers, according to a new Inside Mortgage Trends analysis of MBS data. The average credit score for retail originations was 727.27 in second-quarter agency MBS, 6.47 points higher than the average for correspondent loans and ... [Includes two data charts]

FHA forward originations increased modestly in the second quarter while Home Equity Conversion Mortgage production hit its lowest three-month volume since late 2012. Forward endorsements totaled $51.6 billion in the second quarter, up 5.4 percent from the previous period. It was a different story, however, at midyear where volume was down 16.6 percent from the previous year. Fixed-rate mortgages accounted for the majority of FHA forwards produced from April through June, ending the quarter with $51.3 billion, up 5.1 percent from the first three months of 2018. FHA adjustable-rate mortgages posted a whopping 88.7 percent increase to end the quarter with $307.4 million. FHA purchase activity rose 19.7 percent, closing the quarter with $41.7 billion, while streamlined refinancing dropped 41.3 percent from the prior period. Conventional-to-FHA refi business also was off ... [Charts]

The Mortgage Bankers Association is seeking clarification from FHA on a number of issues in the agency’s Single Family Housing Policy Handbook following Brian Montgomery’s swear-in as FHA commissioner. The MBA identified seven priority issues which lenders say need further guidance. The issues include the following: Deferred Action for Childhood Arrivals and employment authorization documents; Third-party underwriting and vendor verification of borrower income, employment, and assets; Student loan debt calculation; Rent below fair market; Minimum decision credit scores; Contract for deed; and Community transfer fees. In September 2017, President Trump rescinded DACA, a special program created by the Obama administration to provide temporary legal status and work permits to underage persons who entered the U.S. illegally until the government decides ...

It has been more than three years since FHA introduced a new streamlined process of identifying loan defects and their severity to minimize or avoid enforcement action and hefty penalties under the False Claims Act. Despite calls by the mortgage industry to improve and clarify the process – the Single-Family Loan Quality Assessment methodology or “defect taxonomy” – the FHA has yet to make a move to meet industry demands for more detailed defect taxonomy. Contacted for an update on the defect taxonomy, a Housing and Urban Development spokesperson said simply, “Nothing to report on this.” An outgrowth of lender concern over the government’s indiscriminate use of the FCA to prosecute mortgage fraud and recover FHA losses, the defect taxonomy establishes nine categories of loan defects in loans it endorses. The nine defect categories replaced the 99 loan defect codes that were ...

Approximately 11.5 percent of FHA single-family mortgages were in some stages of delinquency in July, 26 basis points down from the previous month, according to an Inside FHA/VA Lending analysis of FHA delinquency rates. At the end of July, FHA servicers were servicing 7,901,090 FHA loans, with top servicer Wells Fargo accounting for 19.2 percent. The share of FHA mortgages that were 30-59 days past due, which is considered early-stage delinquency, was 4.8 percent at the end of July. The share of FHA loans 60-89 days delinquent was 1.6 percent while the share of seriously delinquent loans in July was 4.02 percent. ... [Chart]

The FHA has revised the order of loss-mitigation options for FHA borrowers whose properties or jobs are located in hurricane-ravaged areas in Puerto Rico and the U.S. Virgin Islands. Under the revised policy, FHA is allowing lenders to evaluate borrowers in the affected areas first for the “disaster stand-alone partial claim” before the disaster loan modification. The agency believes this change will enable more affected borrowers to get into a permanent loss-mitigation solution and keep their mortgage in good standing. The policy specifically allows borrowers to maintain their pre-disaster monthly principal and interest payment and retain their current interest rate and term of the FHA-insured mortgage. In addition, the policy provides for the repayment of arrearages with a subordinate mortgage lien that is not repaid until the maturity of the FHA loan, the sale of the property, or the payoff of the loan, or non-FHA refinancing ...

Buoyed by a surge in new business written and profitability, private mortgage insurers outpaced government-backed mortgage insurance programs in the second quarter of 2018. The six active private MIs wrote primary insurance on $80.3 billion of newly originated home loans during the second quarter, up 37.5 percent from the previous quarter and represented the industry’s best results since the fourth quarter of 2007. At the end of the second quarter, private MIs accounted for 38.7 percent of the primary MI market. FHA and VA saw their shares fall slightly to 34.8 percent and 24.5 percent, respectively. Private MIs saw increased activity in the purchase-mortgage business with the six firms combining for $75.7 billion of new purchase mortgages during the second quarter, up 47.3 percent from the first three months of the year. FHA purchase-mortgage business was also up by 33.0 percent during the ...

An undetermined defect is causing the Department of Veterans Affairs’ loan servicing reporting system to spit out duplicate bill-of-collection transaction numbers. The VA Home Loan Guaranty staff is collaborating with the Administrative Loan and Accounting Center (ALAC) to work around the issue. The resolution to correct the defect in the VA Loan Electronic Reporting Interface (VALERI) application is scheduled to be included in the 18.4 VALERI release on Dec. 8, 2018. VALERI is in the first phase of a three-year project to convert from a system for reporting and storing servicing data to an end-to-end mortgage-processing platform. The VA also has issued a number of servicing alerts and reminders. Liquidation appraisal fees in Colorado will increase in certain counties effective Sept. 1, 2018, so that all counties will have the same fee per property type. The fee changes will be updated and reflected on the ...

Michael Bright Clears First Hurdle to Becoming President of GNMA. The Senate Committee on Banking, Housing and Urban Affairs this week voted to confirm Michael Bright as president of Ginnie Mae. Bright’s confirmation is broadly positive for housing, said Jaret Seiberg, financial services and housing policy analyst for Cowen Washington Research Group. Bright is a former staffer for Sen. Bob Corker, R-TN, and has a history of working well with Republicans and Democrats, said Seiberg. In addition, he has worked closely with Sen. Elizabeth Warren in cracking down on loan churning, he added. The Mortgage Bankers Association welcomed the news. “Mr. Bright would bring significant experience within the mortgage industry and on Capitol Hill to the role of Ginnie Mae president,” said Bill Kilmer, the group’s chief lobbyist. “He has demonstrated a commitment to bipartisan solutions regarding complex ...