New York has enacted legislation redefining a reverse mortgage as a “home loan.” With the new law, statutory 90-day pre-foreclosure notices and certificates of merit would be required for all reverse-mortgage foreclosures in the Empire State. New York’s foreclosure settlement conference law has incorporated the new definition by reference, removing any doubt that such meetings are required in most reverse-mortgage cases, said industry attorneys. Gov. Andrew Cuomo, D, signed the amendment into law on April 12, 2018, though it is deemed to have been in full force and effect as of April 20, 2017. However, the pre-foreclosure notice requirement for reverse mortgages has an effective date of May 12, 2018. For actions commenced after May 12, the new state law requires lenders, servicers or assignees to provide a pre-foreclosure notice at least 90 days before initiating legal action against the borrower at the ...

Mortgage brokers and their wholesale funders gained some share in the FHA/VA market during the first quarter of 2018, according to a new Inside FHA/VA Lending analysis. Survey data collected by Inside Mortgage Finance show that all three production channels took big hits in FHA/VA volume in early 2018. The $49.11 billion in government-insured lending reported by participating lenders was down 20.7 percent from the previous quarter and 10.8 percent below the volume the group generated in the first three months of 2017. Correspondent production remained the biggest source of FHA/VA loans, accounting for 53.5 percent of the survey sample in the first quarter. But production through this channel was down 22.2 percent from the previous three-month period, a slightly larger decline than seen overall. Four of the top five lenders in the group have strong correspondent platforms, especially ... [Chart]

New FHA endorsements and VA home loan guaranty volume were both down significantly in the first quarter, but the two programs followed different paths to mostly similar results. A new Inside FHA/VA Lending ranking and analysis shows that endorsements of FHA forward mortgages slipped 10.5 percent from the fourth quarter to $48.96 billion. That was the lowest quarterly output for the program since early 2015, when just $39.48 billion of FHA forward loans were originated. In the VA program, new loan guarantees fell 11.1 percent from the fourth quarter to $39.06 billion. That was the lowest three-month total since the first lap in 2016, with $37.09 billion produced. Most of the decline in FHA business was in purchase-mortgage lending, which fell 13.5 percent from the fourth quarter. While purchase loans still accounted for a hefty 71.1 percent of FHA forward endorsements during the ... [Charts]

A recent announcement by the Department of Housing and Urban Development to seek public comment on its 2013 disparate-impact rule is an opportunity for both HUD and the industry to clarify the liability issues it raises, said compliance experts. On May 10, HUD announced it would formally seek public input on whether the disparate-impact regulation is in tune with the Supreme Court of the United States’ 2015 decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. The HUD rule affirmed the use of disparate impact to establish liability for violations of the Fair Housing Act. It lays out a three-step approach to determining FHAct liability. The first step requires the plaintiff to demonstrate that a practice or a policy has a discriminatory effect on a protected class of persons. According to the rule, liability may be established even if the ...

President Trump this week announced Michael Bright as his choice to lead Ginnie Mae, an agency under the Department of Housing and Urban Development, even as Senate Democrats continued to delay vote on his nominee for FHA commissioner. Bright is currently Ginnie Mae’s executive vice president and chief operating officer, though he has been serving as acting president since Theodore Tozer stepped down on Jan. 20, 2017. Tozer served as Ginnie president under the Obama administration for nearly seven years. Bright joined Ginnie on July 11, 2017. Previously, he served as director for financial markets at the Milken Institute and as senior vice president of BlackRock/PennyMac. During his time with Milken, Bright co-authored a paper with Ed DeMarco, former acting director of the Federal Housing Finance Agency and currently president of the Financial Services Roundtable, which proposed to ...

FHA extended foreclosure timelines for properties with a Home Equity Conversion Mortgage loan in hurricane-stricken areas in Puerto Rico and the U.S. Virgin Islands. The 90-day extension aims to prevent further losses to the Mutual Mortgage Insurance Fund. The foreclosure timelines were extended through Aug. 16, 2018, for HECM-backed properties located in areas ravaged by Hurricane Maria. Specifically, the extension applies to 78 affected municipalities in Puerto Rico, as well as HECM-backed properties on the islands of St. Croix, St. John and St. Thomas. In a report to Congress last year, Ginnie Mae reported that, as of Sept. 30, 2017, its aggregate hurricane exposure to its mortgage-backed securities portfolio was approximately $166.9 billion from Hurricanes Harvey, Irma and Maria. Ginnie’s exposure specific to Hurricane Maria totaled $13.7 billion, which is 1.24 percent of all ...

Military Direct Mortgage has announced a new training program to help educate real estate agents about the VA loan as well as the advantages of working with veteran borrowers. The program is called “Operation Welcome Home” and aims to connect home-purchase borrowers with real estate agents, who understand veterans’ specific needs and are versed in the VA loan process, said Patti White, president of the Avon, CT-based company. Many real estate agents have little or no knowledge of the VA loan and loan process, which makes the product the least of their priorities, said White. “For example, my husband has been retired from the service for 44 years and we have gone through refinancing,” she noted. “Yet no one has asked us if either of us had served in the military.” There is also a misconception about the VA loan –too much paperwork, restrictive rules and takes longer to close. “I just think there’s ...

Minority borrowers applying for an FHA or VA first-lien purchase mortgage were more likely to be denied than comparable white borrowers, according to an Inside FHA/VA Lending analysis of 2017 Home Mortgage Disclosure Act data. This finding was no surprise because the denial rates reflected the same historical trends for white and minority borrowers over the years. Approximately 727,865 FHA/VA loans went to white borrowers last year. Of the 978,981 government-insured loan applications submitted by white borrowers, 9.07 percent were denied. Of the 231,108 black borrowers who applied for a government-backed home loan, lenders rejected 14.57 percent. Out of the 285,707 FHA/VA loan applications submitted by Hispanics, lenders denied 11.42 percent. Asian borrowers submitted the least number of FHA/VA loan applications, 44,739. Lenders denied 11.36 percent. For FHA, the ... [Chart]

With overall production levels falling, there was a modest increase in several risk vectors of FHA and VA loans pooled in Ginnie Mae mortgage-backed securities during the first quarter of 2018.A new Inside FHA/VA Lending analysis shows the average credit score for FHA loans in Ginnie MBS issued during the first quarter was 671.1, the lowest level since Ginnie began reporting loan-level data on its securities. That was down from 673.2 in the fourth quarter and 679.2 a year ago. Part of the slide in FHA credit scores likely reflects the increased share of purchase mortgages, which typically have lower scores than refinance loans. The same thing happened in the VA market, where average credit scores fell 1.1 points to 707.8 in the first quarter. A year ago, the average VA score was 710.2. Debt-to-income ratios also drifted higher, suggesting more risk of default. Among FHA loans, the average DTI rose to ... [Charts]

Acting FHA Commissioner Dana Wade voiced concern over increasing shares of FHA-insured loans with high debt-to-income ratios, cash-out refinances and purchase loans with downpayment assistance. Testifying recently before the House Appropriations Committee on the agency’s FY 2019 budget, Wade warned that such disturbing trends suggest that FHA’s exposure to loss could rise and put the Mutual Mortgage Insurance Fund and taxpayers at risk. Wade said FHA’s financial health and the impact of the volatile reverse mortgage portfolio are a continuing concerns. Last year, the fund’s economic net worth declined by $1.9 billion and the capital reserve ratio fell to 2.09 percent from 2.35 percent the previous year due to losses associated with Home Equity Conversion Mortgage loans. Wade noted an increase in the proportion of borrowers with DTI ratios in excess of 50 percent. In February, the ...