Congress should pass legislation setting uniform standards for qualified mortgages, according to the U.S. Mortgage Insurers trade group. USMI raised particular concerns about differences in the points-and-fees calculation for FHA mortgages compared with the standard for mortgages delivered to the government-sponsored enterprises. As required by the Dodd-Frank Act, the Consumer Financial Protection Bureau established standards for QMs. Certain federal regulators, including the Department of Housing and Urban Development, were allowed to implement QM standards that differed from the CFPB standards. USMI noted...

Correspondent mortgage originators account for an unusually large share of FHA and VA lending, but the channel lost some market share in 2016, according to a new analysis by Inside FHA/VA Lending. Correspondent production accounted for 53.2 percent of the $275.14 billion of government-insured mortgages originated by a diverse group of lenders that included the top players in the market. That was a significantly bigger correspondent share than was seen in the conventional-conforming market (42.6 percent) or the jumbo space (16.2 percent). However, the 2016 figure was down from a 57.8 percent correspondent share of FHA/VA lending back in 2015, the first year for which data are available. Correspondent originations of government-insured lending by the group were up 31.1 percent from 2015, but their total FHA/VA lending jumped 42.3 percent. The retail share rose ... [ 1 chart ]

Production of Home Equity Conversion Mortgage loans was down in 2016 with an estimated $14.9 billion originated last year, compared to $16.0 billion the previous year. Year-over-year, total HECM volume fell 6.4 percent. Purchase loans accounted for 85.9 percent of FHA-insured reverse mortgages produced over the 12-month period. Originations, however, rose by 8.0 percent in the fourth quarter from the previous quarter due to a spike in HECM lending in December. Purchase HECMs with an adjustable rate appeared to be the product of choice among HECM borrowers in 2016. American Advisors Group continued to dominate the market, closing 2016 with $2.1 billion in HECM originations for a 14.0 percent market share. One Reverse Mortgage was the second top HECM producer of the year with $855 million, while Reverse Mortgage Funding was in third place with $649.8 million. Liberty Home Equity Solutions hung on ... [ 1 chart ]

Ginnie Mae’s outdated organizational structure and staff levels have made it difficult for the agency to properly monitor and mitigate the risk posed by the increasing number of nonbanks participating in its MBS programs, according to the Department of Housing and Urban Development’s inspector general. In a recent briefing paper, HUD Inspector General David Montoya highlighted challenges Ginnie faces in monitoring nonbanks, adding that HUD is currently being audited by the IG to gauge its capacity to track and supervise nonbanks, said Montoya. Ginnie acknowledged...

Solicitation of VA purchase loans for streamline refinancing within weeks of closing is apparently continuing despite Ginnie Mae’s efforts to stop the harmful practice. The Mortgage Bankers Association has expressed concern that guidance on pooling eligibility for streamlined refinance loans, which Ginnie issued in October last year, was far less effective than expected. Although the aggressive refinancing trend has slowed due to Ginnie’s action, there are still “pockets of that activity” being reported, said Pete Mills, MBA senior vice president. Refinancing a veteran’s purchase mortgage less than six months after its origination is not in the vet’s best interest because it strips equity from the house and results in higher financing costs, said Mills. While the rapid refi trend involves only a small number of loans in Ginnie mortgage-backed securities pools, investors do not get the full benefit of their investment because of early prepayment. Mills said there are a handful of lenders and brokers that ...

A favorable court ruling on the statute of limitations for filing claims under the False Claims Act gave Quicken Loans its first win in a closely watched government case involving allegedly fraudulent FHA loans. Judge Mark Goldsmith of the U.S. District Court for the Eastern District of Michigan dismissed portions of the Department of Justice’s lawsuit against Quicken in a March 9 decision, narrowing the lender’s potential liability for FHA losses. The losses were blamed on sloppy underwriting, fraudulent certification and loan performance. The DOJ said the FHA would not have knowingly insured the loans had it known they were defective. The DOJ and the Department of Housing and Urban Development’s inspector general began an investigation of Quicken’s FHA lending activities in April 2012. The investigation encompassed some 246,000 FHA loans, which Quicken originated from ...

A Georgia appellate court recently handed Wells Fargo Bank a provisional win in a lawsuit in which a VA borrower alleged breach of contract and wrongful foreclosure. In Wells Fargo Bank, N.A., d/b/a Wells Fargo Home Mortgage v. LaTouche, the court ruled that Wells did not breach its duty to the borrower to comply with VA foreclosure regulations. The court concluded that the trial court had erred in denying Wells Fargo’s motion for summary judgment as to the defendant’s claims for wrongful foreclosure that hinged upon the same VA regulations. The reversal stemmed from Wells Fargo’s request for an interlocutory review of the trial court’s denial of its motion for summary judgment on defendant Michael LaTouche’s claims for breach of contract, wrongful foreclosure and “surprise. An interlocutory review is undertaken when a question of law must be answered by an appellate court before ...

Security National Mortgage Co. of Salt Lake City has paid $4.25 million to the Department of Housing and Urban Development to settle allegations of failing to comply with FHA loan requirements. Security National, a retail lender, has been an FHA-approved direct endorsement lender since October 1993, the year it was founded. The settlement resolves a joint civil investigation by the HUD Office of the Inspector General, Department of Justice and the U.S. Attorney’s Office for the District of New Jersey into Security National’s FHA origination and underwriting practices in connection with 100 FHA-insured loans. As part of the settlement, the lender “agreed it engaged in certain conduct in connection with its origination and underwriting of the loans.” The HUD OIG provided no details about the investigation. The OIG said the loans that were certified as compliant would not have been insured had ...

HUD Secretary Ben Carson Launches National Listening Tour in Detroit. Housing and Urban Development Secretary Ben Carson began a national listening tour March 15 at Benjamin Carson High School in Detroit. Carson’s three-day visit to his hometown gives him an opportunity to hear directly from HUD field personnel and stakeholders who rely upon and support public housing. This week, President Trump released his proposed preliminary FY 2018 budget, which showed among other things a drastic $6.2 billion reduction in funding for public housing assistance and affordable housing. HUD did not release an itinerary of Carson’s listening tour. IG Seeks Changes to Ginnie Mae’s Management Hierarchy, Staffing. Ginnie Mae’s outdated organizational structure and staff levels have made it difficult for the agency to properly monitor and mitigate the risk posed by the increasing number of nonbanks participating in ...

A recent decision by a federal judge in Detroit dismissing portions of the Department of Justice’s FHA-related claims against Quicken Loans will shrink the lender’s liability under the False Claims Act, according to a legal expert. In a decision rendered March 9 on the closely watched case, U.S. District Judge Mark Goldsmith narrowed the scope and timeframe for which the DOJ can pursue any recovery or settlement against Quicken Loans for FHA losses allegedly due to faulty underwriting and loan default performance. It is the first major decision since the DOJ’s suit was transferred from federal court in Washington, DC, to federal court in Detroit last year. The DOJ and the Department of Housing and Urban Development’s Office of the Inspector General began...