The Department of Housing and Urban Development last week announced stronger protections for homeowners and more favorable pricing for nonprofit participants in its Distressed Asset Stabilization Program but reactions from community and advocacy groups have been mixed. The program has been under fire because the bulk auctions of nonperforming mortgages have primarily benefited private equity firms and hedge funds, which bought the loans at a steep discount but did little to save homeowners from foreclosure or revitalize the communities where the properties backing the loans are located. HUD converted...

Ginnie Mae has good reason to be concerned about rapid demographic change in its relatively small issuer community. Nonbank institutions – many of them relatively newly formed and based on nontraditional business models – are taking over the market. Nonbank issuers accounted for a whopping 69.4 percent of Ginnie’s issuance of single-family mortgage-backed securities during the first quarter of 2016. A year ago, their share was 64.6 percent. Two years ago it was 46.7 percent. With those kinds of gains on the production line, it’s not hard to see why nonbanks are claiming a growing share of Ginnie servicing outstanding. At the end of March, nonbanks owned 46.7 percent of Ginnie single-family mortgage servicing rights, up a hefty 11.5 percentage points in one year. That rate of growth can’t be accomplished just by producing new MBS because the servicing market simply doesn’t grow that fast. (Although the Ginnie market has grown significantly faster than any other segment of ... [ 2 charts ]

Investors in FHA’s distressed note sales program would be required to do more for homeowners to help them avoid foreclosure and keep their homes, thanks to improvements to FHA’s Distressed Asset Stabilization Program (DASP) announced this week by the agency. The changes appear aimed at consumer groups’ criticism of the Department of Housing and Urban Development for allowing profit-oriented investors to purchase the troubled HUD assets at a discount and flip the homes for a profit without ever helping the distressed homeowner. Although the transactions make good economic sense for investors and the government, struggling homeowners end up losing their homes without having tried any loan modification option that could have helped them avoid foreclosure. HUD launched the DASP in 2010 under pressure from Congress to help stabilize the FHA’s Mutual Mortgage Insurance Fund, which ...

VA home loan guarantees reported modest growth in the first quarter of 2016 thanks to the program’s no-downpayment feature and higher-quality borrowers, according to Inside FHA/VA Lending’s analysis of agency data. The fourth quarter of 2015 was the worst quarter in an otherwise good year for VA lending, as lenders racked up $35.2 billion in total originations, down 21.0 percent from the third quarter, which was VA’s most productive for the year. However, the first three months of 2016 are off to a promising start with overall VA volume totaling $37.1 billion, a 5.5 percent improvement from the prior quarter. VA purchase volume was down 8.1 percent in the first quarter to $18.2 billion from the previous quarter, while VA IRRRL (interest rate reduction refinance loans) production rose 43.4 percent to $10.9 billion over the same period, data further showed. VA’s no-downpayment option in conjunction with the ... [ 1 chart ]

The FHA’s 203(k) Property Repair and Rehabilitation program could use some jolt as inflexible agency guidelines, construction inexperience and closing delays continue to constrain loan growth. Origination of FHA-insured fixer-upper loans fell 10.9 percent in the first quarter of 2016 to $762.7 million from $856.2 million in the previous quarter. It was a different story year-over-year, however, as volume during the first three months rose 20.8 percent compared to volume during the same period last year. The top five FHA 203(k) lenders struggled as their combined loan production dropped 9.4 percent quarter-over-quarter and by 3.0 percent on a year-to-year basis. Their combined originations accounted for $157.5 million of total FHA 203(k) loan production for the first quarter. Purchase loans accounted for $131.0 million of rehab loans originated during the period while refinance loans totaled a ... [ 1 chart ]

Lenders will face higher penalties for violations of agency rules and regulations as the FHA and the Department of Veterans Affairs adjust their respective maximum civil monetary penalties for inflation. The adjustments are mandated by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which also requires publication of an interim final rule showing the current and adjusted penalty amounts. Effective June 22, 2016, VA’s maximum civil monetary penalties for false loan guaranty certification increased from $10,000 to $21,563, and from $5,500 to $10,781 for fraudulent claims or statements in any VA program. Comments on the VA interim final rule must be received on or before Aug. 22, 2016. Meanwhile, the FHA also is making inflation adjustments for its maximum civil penalties through an interim final rule that will take effect Aug. 15, 2016, the day before the ...

The Department of Veterans Affairs is planning to conduct computer-based training for appraisal managers to improve the way they assess the VA Home Loan Guaranty program’s appraisal process. The VA said it hopes to garner more positive feedback from staff appraisal reviewers this year by having them train with LoanSafe Appraisal Manager (LSAM). LSAM, an appraisal risk-analysis tool from CoreLogic, automatically evaluates all the data and form fields in an appraisal, quickly returning an easy-to-use summary of key valuation, market-risk factors and compliance issues. In June last year, the VA announced an automated Appraisal Management Service (AMS) that includes the LSAM product for use in enhancing the appraisal review process prior to issuance of the Notice of Value. The AMS system provides lender and servicer appraisal processing programs and staff appraisal reviewers (SARs), which will ...

A new 1 percent home loan product has quietly hit the market to help qualified, cash-strapped borrowers overcome one of the biggest obstacles to homeownership: downpayment. With significant variation in details, the 1 percent down mortgages offered by Quicken Loans and Guaranteed Rate stem from their partnerships with Freddie Mac and are structured as part of Freddie’s Home Possible Advantage program. In Quicken’s version, the borrower pays...

Last week, Ocwen Financial agreed to a $30 million settlement with the Department of Justice regarding two lawsuits that alleged violations of the False Claims Act. The lawsuits alleged that Ocwen Loan Servicing and Ocwen’s Homeward Residential division violated the FCA by falsely certifying their compliance with the Home Affordable Modification Program and FHA insurance programs, thus rendering all HAMP incentive and FHA insurance payments on Ocwen- or Homeward-serviced loans false claims. One of the cases was scheduled...

The New York legislature approved a bill late last week that will require servicers handling loans in the state to maintain vacant properties in certain circumstances. The requirements were strongly opposed by the Mortgage Bankers Association. In general, the new law requires servicers of residential mortgages in New York to complete an exterior inspection of properties within 90 days of a borrower’s delinquency to determine the occupancy status of the property. The law also requires ongoing inspections of properties related to severely delinquent mortgages every 25 to 35 days. If the servicer has a reasonable basis to believe that a property is vacant and abandoned, the servicer is...