The Department of Veterans Affairs and the Consumer Financial Protection Bureau have issued a joint warning to servicemembers and veterans about VA refinancing offers that sound too good to be true. There is a good chance that borrowers with a VA loan have already received unsolicited offers to refinance their mortgages even just months after closing, the agencies said in their first “warning order” (WARNO). Many of these refi solicitations promise extremely low rates, thousands of dollars in cash back, skipped mortgage payments, no out-of-pocket costs and no waiting period, the agencies noted. The VA and the CFPB said lenders offering VA refinances may use aggressive and potentially misleading advertising and sales tactics. “Lenders may advertise a rate just to get you to respond or you may receive a VA mortgage refi offer that provides limited benefit to you while adding thousands of dollars to your loan balance,” the agencies warned. Even though the VA prohibits a lender from advertising skip payments on ...

A former FHA commissioner has recommended raising the agency’s capital reserve ratio to 3 percent, to make FHA stronger and more resilient. Carol Galante, who served two years as FHA commissioner and assistant secretary for housing in the second term of the Obama administration, laid out her proposal along with other recommendations in a paper that she co-authored. Housing-finance reform without a retooled FHA could threaten families’ access to homeownership and increase risk to taxpayers, contrary to the goals of reform, said Galante, currently the faculty director of the Terner Center for Housing Innovation at University of California Berkeley. In her paper, Mission Critical: Retooling FHA to Meet America’s Housing Needs, Galante spelled out the changes necessary to help FHA perform its complementary and countercyclical role in the nation’s housing markets. Galante called for ...

A newly released study by the Department of Veterans Affairs showed a 4.0 increase in the number of veterans who have used a VA mortgage in FY 2016 compared to the previous fiscal year. Also, a recent survey conducted by loanDepot found that 56 percent of veterans who participated did not take advantage of their VA loan benefits. Respondents included 400 targeted active servicemembers, veterans and surviving spouses. Conducted by the National Center for Veterans Analysis and Statics, the VA study focused on veterans who have used at least one of 22 benefits or services provided by the VA during fiscal years 2007 through 2016. The study found that loan guarantee was the third most used benefit by veterans behind health care and pensions. Of the 7.1 million vets who used at least one VA benefit, 2.6 million (36.6 percent) took advantage of the zero-downpayment, low-interest ...

Ginnie Mae called on issuers to ensure that the data they submit are accurate following the discovery of erroneous payment reports. The agency said it has noticed discrepancies in the reporting of the first payment date on loan modifications in violation of Ginnie guidelines. Specifically, the first payment date some issuers reported as part of the loan-delivery data did not match the date submitted for the same mortgage loan as part of issuers’ monthly report of pool and loan data. Ginnie blamed the errors either on loans set up incorrectly for servicing or faulty data issuers had reported to the Department of Housing and Urban Development. Guidance issued by Ginnie on Nov. 14 reminded issuers to report the first scheduled payment date of the re-amortized loan when reporting the first payment date for modified mortgages through either the GinnieNET or the Reporting and Feedback System. The date ...

Congress and the FHA should avoid undertaking policy changes that would further weaken the agency’s ability to cover insurance losses and potentially lead to another taxpayer bailout, according to a recent analysis by The Heritage Foundation. THF analyst John Ligon and Norbert Michel, a research fellow, said FHA policy reforms should ensure that the agency maintains a limited role in the housing finance system. FHA should make way for private capital to enter the market and serve the housing needs of American households, they added. FHA can accomplish such policy goals by lowering its loan limits and adequately pricing insurance for borrower risk, the analysts said. In addition, Congress should ensure that FHA borrowers are required to maintain mortgage insurance over the full life of the loan as required currently by the Department of Housing and Urban Development, said ...

The Ginnie Mae/Veterans Affairs task force is meeting regularly to find a solution to the VA churning problem that is triggering rapid prepayments to the detriment of MBS investors – and a test currently used by the FHA might provide the answer.

Correspondent-based lending operations are accounting for a growing share of the FHA and VA home loans pooled in Ginnie Mae mortgage-backed securities, according to a new analysis and ranking by Inside FHA/VA Lending. In fact, correspondent originations are the only production channel to see year-over-year growth in FHA and VA business through the first nine months of 2017. Retail and wholesale-broker production is down for both FHA and VA loans. Correspondent programs are most dominant in the FHA market, perhaps reflecting a preference among large producers to have recourse to a primary-market lender if the government later finds defects in how the loan was originated. Correspondents accounted for 48.7 percent of FHA loans pooled in Ginnie MBS during the first nine months of the year, up from 43.1 percent in all of 2016. Volume was up 1.7 percent from the ... [Charts]

Analysts are predicting continued positive results in the forthcoming actuarial report to Congress on the status of the FHA Mutual Mortgage Insurance Fund. The FY 2017 annual report is expected to show stable FHA financials, which could prompt renewed industry calls for a cut to the annual mortgage insurance premium, according to a Bank of America Merrill Lynch analysis. Rising home prices and loan-to-value curing are likely to suppress forecasted losses in the MMIF’s single-family forward portfolio, enabling the fund to stay above its mandated 2.0 percent capital reserve ratio, analysts said. However, the BAML analysts see a “low likelihood of an actual cut in MIPs.” Although Department of Housing and UrbanDevelopment Secretary Ben Carson said he would study MIP reduction once a new FHA commissioner is confirmed, the Trump administration is less likely to ...

A new net tangible benefit test for ensuring that a VA borrower benefits from a refinancing appears to be the obvious solution to the VA’s churning problem, according to analysts at Bank of America Merrill Lynch (BAML). Modeled after the FHA net tangible benefit test, the test seems to be a “foregone conclusion” for VA, analysts said. A Ginnie Mae/VA task force is currently working to resolve the problem, which is causing rapid prepayments in Ginnie mortgage-backed securities and raising serious doubts as to whether aggressive refinancing truly benefits veterans and servicemembers. “There is a critical need to ensure that veteran borrowers are not harmed by repeated refinancings through VA’s Interest Rate Reduction Refinance Loan program,” said Mortgage Bankers Association President/CEO David Stevens during a recent appearance before the House Financial Services Committee. IRRRLs, also referred to ...

Industry stakeholders are calling for changes to some of the mortgage- and housing-related provisions in the House Republicans’ proposed tax reform bill. On Nov. 9, 2017, the House Ways and Means Committee passed H.R. 1, the Tax Cuts and Jobs Act, retaining provisions that may significantly reduce homeownership tax incentives. At the same time, Senate Republicans unveiled their tax reform package, which limits the mortgage interest deduction, eliminates state and local tax deductions and nearly doubles the standard deduction, among other provisions. The Mortgage Bankers Association, National Association of Realtors and the National Association of Home Builders each had a list of concerns but were uniformly opposed to proposed changes to the mortgage-interest deduction. Among other things, the bill would cap the mortgage-interest deduction (MID) at $500,000 for new ...