If lenders used the seemingly sensible underwriting standards that were in place in 2001, some 1.2 million more mortgages would have been originated in 2014, according to estimates by the Urban Institute’s Housing Finance Policy Center. Laurie Goodman, director of the HFPC, said lenders have “plenty of room to safely ease credit.” An underwriting index from the HFPC suggests that originators are accepting little risk in terms of borrower or loan characteristics, hindering a recovery in the mortgage market and the broader economy. Lenders note...

Wells Fargo has agreed in principle to a $1.2 billion settlement to resolve FHA-related civil claims brought by the federal government while First Tennessee Bank has agreed to subsidize interest-rate reductions on home mortgages as part of a $1.9 million settlement agreement with the Department of Housing and Urban Development. The Wells Fargo settlement was disclosed in a recent filing with the Securities and Exchange Commission. If finalized, the settlement would be the largest for FHA. So far, the FHA has collected...

For the first time since October 2008, Moody’s Investors Service upgraded two top private mortgage insurance companies to investment grade due to strong performance of new insurance written, cost savings and fewer losses. However, risk factors, including proposed capital regulations from the National Association of Insurance Commissioners, could adversely impact the ratings. Mortgage Guaranty Insurance Corp. and Radian Guaranty now have Baa3 ratings from Moody’s, although other rating servicers appear disinclined to follow. Both MIs continue to be rated below investment grade by Standard & Poor’s. The improved ratings come...

Housing reform legislation that would ease FHA restrictions on condominium financing and allow delegation of loan approval authority to qualified lenders under the U.S. Department of Agriculture’s rural housing programs this week passed the House by a vote of 427-0. Described as an FHA reform bill, H.R. 3700, the “Housing Opportunity Through Modernization Act,” would make several incremental changes across a number of federal housing programs. It would modify...

Republicans on the House Financial Services Committee this week pushed through their version of fiscal year 2017 budget views and estimates (BVE), taking aim at government-sponsored enterprises Fannie Mae and Freddie Mac, as well as FHA and the Consumer Financial Protection Bureau. The minority Democrats tried to amend the broader GOP package 10 times, but each amendment went down to defeat on a party-line basis. There were no Republican amendments offered. On the issue of Fannie, Freddie and housing finance reform, Republicans on the committee said...

The surging multifamily housing market in the U.S. was a major factor in the huge increase in commercial MBS issuance last year, according to a new Inside MBS & ABS analysis. A total of $206.66 billion of income-property mortgages were securitized during 2015, a 22.6 percent increase from the previous year. It was the strongest annual output of commercial MBS since 2007, the year before the wheels fell off the non-agency CMBS market. New issuance rebounded...[Includes one data table]

The FHA and VA mortgage servicing markets saw relatively little growth but steady performance trends during the fourth quarter of 2015, after a turbulent market early in the year. A new Inside FHA/VA Lending analysis of Ginnie Mae disclosure data shows delinquency rates edged slightly lower at the end of last year, although virtually all of the improvement was in the less-severe category of loans 30-60 days past due. The 60-to-90-day delinquency rate was unchanged for FHA loans but up slightly for VA loans. And both programs saw modest increases in loans more than 90 days past due. The data provide a mixed view of growth in the outstanding supply of FHA and VA servicing. According to Ginnie’s monthly summary, the outstanding balance of single-family mortgage-backed securities (excluding home-equity conversion mortgage pools) was $1.495 trillion at the end of ... [ 4 charts ]

The Department of Veterans Affairs has issued guidance to help VA lenders understand better the agency’s interim final rule on a borrower’s ability to repay and qualified mortgages. The guidance was published in a frequently asked questions (FAQs) format to clarify and explain both the VA’s ATR and QM standards. The VA interim final rule became effective on May 9, 2014, the date it was published in the Federal Register. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires residential mortgage lenders to make a reasonable and good faith determination that the consumer has a reasonable ability to repay the loan according to its terms. The statute directed the Consumer Financial Protection Bureau to develop and implement an ATR/QM rule. Under the CFPB’s final rule, a qualified mortgage is a category of loans that have certain, more stable features that ...

The Department of Veterans Affairs and the U.S. Department of Agriculture Rural Housing Service have issued 2016 guidelines for lending to borrowers who have gone through a bankruptcy, foreclosure or a short sale. Under VA guidelines, borrowers emerging from a previous Chapter 7 bankruptcy may apply for a VA loan two years after the bankruptcy discharge. Borrowers with a Chapter 13 bankruptcy may qualify for a new VA loan if they have made at least 12 months of payments and the lender concludes that they have reestablished satisfactory credit. Before the bankruptcy-tainted borrower applies for a VA loan, however, the trustee or the bankruptcy judge must approve the new loan. The lender may put in a good word on behalf of the borrower provided the latter has met all requirements for a new loan. Borrowers may apply for a VA loan two years after a foreclosure or a short sale. In the case of ...

The FHA flood insurance requirements could make it difficult or more risky for lenders to originate FHA loans in states with significant flood risk or where flood maps may not accurately reflect the current flood risks, the Mortgage Bankers Association warned. Testifying during a recent hearing on private flood insurance, Steven Bradshaw, executive vice president of Standard Mortgage and MBA representative, warned that FHA’s current requirement for lenders to secure flood insurance on properties only if it is located within a high flood-risk zone has had some unexpected adverse impact, particularly in the wake of hurricane-related catastrophes. Bradshaw noted that many homes that were destroyed by Hurricane Katrina were not located in special flood-hazard areas (SFHA) and therefore were not required to have flood insurance. “Sadly, these borrowers were often uninsured and the ...