Maintaining the government MBS guarantee and the agency to-be-announced market is vital to a reformed housing-finance system, according to industry trade groups testifying during a House Financial Services Subcommittee hearing this week. Kevin Chavers, a managing director at BlackRock speaking for the Securities Industry and Financial Markets Association, said the cost of credit would go up without a government MBS guarantee, and banks would not be able to ...

As Congress works on legislation aimed at reforming the roles of the government-sponsored enterprises, provisions regarding practices in the non-agency mortgage-backed security market should be included in the legislation, according to the Securities Industry and Financial Markets Association. Kevin Chavers, a managing director at BlackRock, testified on behalf of SIFMA at a hearing this week by the House Financial Services Subcommittee on Housing and Insurance ...

Overall denial rates for nonconventional loan applications (FHA, VA and Rural Housing Service) fell slightly in 2016 to 13.4 percent from 13.9 percent in 2015, Home Mortgage Disclosure Act data showed. In the nonconventional refinancing segment, denial rates rose to 32.9 percent last year from 30.3 percent in the previous year. Approximately 23.9 percent of FHA loan applicants were denied last year while VA turned down 20.0 percent of borrowers who sought a VA loan. An estimated 14.3 percent of FHA purchase-loan applicants were turned down. VA denied 11.4 percent of its purchase-mortgage applicants although its total purchase-loan applications are far fewer compared to FHA. According to the Federal Reserve’s overview of the 2016 HMDA data, as in past years, blacks, Hispanics and “other minority” borrowers had notably higher denial rates overall compared to white borrowers. Denial rates for ...

Legislation was introduced this week to repeal the FHA’s life-of-loan requirement and reinstate a previous policy of requiring borrowers to pay premiums until the outstanding principal balance reaches 78 percent of the original home value. Rep. Maxine Waters, D-CA, ranking member of the House Financial Services Committee, introduced the Making FHA More Affordable Act so that families would not have to keep paying mortgage insurance premiums for the life of their FHA-insured loan. Up until June 3, 2013, FHA was aligned with the private mortgage insurance industry in charging premiums only until the outstanding principal balance reached 78 percent of the original home value. The FHA first announced its intention to require life-of-loan premium payments in January 2013, allowing the agency to collect more premium revenue to bolster its ailing Mutual Mortgage Insurance Fund. FHA’s life-of-loan policy ...

CoreLogic to Provide Solutions to Cut FHA, MMIF Losses. The Department of Housing and Urban Development has chosen CoreLogic to provide valuation and workflow solutions to mitigate losses to the FHA and the Mutual Mortgage Insurance Fund. Under an agreement with HUD, CoreLogic will provide support to determine the best strategies and plans for the valuation and disposition of distressed and real estate-owned properties in HUD’s inventory. Individual Condominium Loan Processing in the VA’s WebLGY System. The Department of Veterans Affairs has issued guidelines to address issues that have arisen since making changes to its web-based loan guaranty system, WebLGY, earlier this month in regards to condominium identification. System changes included removal of the fields where users would input condo IDs when ordering a VA loan identification number (LINs)/appraisal ...

Community bankers want to make sure they have access to the secondary mortgage market – including the ability to retain servicing rights – when the dust settles from housing-finance reform. The Independent Community Bankers of America and National Association of Federally Insured Credit Unions were among those that testified at a House Financial Services Subcommittee on Housing and Insurance hearing this week. Representing ICBA, Sam Vallandingham, president and CEO of ...

The House Financial Services Committee recently passed a handful of mortgage-related bills, including H.R. 2954, the Home Mortgage Disclosure Adjustment Act, introduced in June by Rep. Tom Emmer, R-MN. His measure would exempt all but the top 10 percent of mortgage lenders from some pending data collection and reporting requirements under the Home Mortgage Disclosure Act, according to an analysis by Inside the CFPB. Starting with 2017 data (to be submitted to the CFPB in early 2018), the volume threshold for HMDA respondents is a minimum of 25 originated mortgage loans in each of the last two years (i.e., 25 loans in 2015 and 25 loans in 2016). This volume threshold only applies to depositories in 2017, then applies to ...

Fannie Mae and Freddie Mac are poised to report robust earnings for the third quarter, likely blowing past results of the prior two periods, according to an analysis by Inside The GSEs. The only question now is this: Just how good will it be? “And most of that money will be swept into the Treasury,” noted Tim Rood, a former Fannie Mae executive who now heads The Collingwood Group. Not only did the GSEs benefit from a strong origination and MBS issuance market in 3Q17, but a previously announced legal settlement with Royal Bank of Scotland will finally hit the books.

Federal Housing Finance Agency Director Mel Watt said the likelihood of a draw from Treasury is growing fast in a reply letter to the 15 trade groups that wrote late last month advocating for legislation instead of recapitalization. Watt reiterated his position in the Oct. 12 letter and said while he appreciates their views, he has expressed “repeatedly and publicly” that the declining capital buffers leave Fannie Mae and Freddie Mac with no ability to absorb potential losses. “FHFA is concerned that in the absence of a sufficient buffer, normal operating losses, such as from interest rate volatility and the accounting treatment of...

The FHA could be in position to become a much bigger rival to Fannie Mae and Freddie Mac, according to one analyst, basing his observation on U.S. Department of Housing and Urban Development Secretary Ben Carson’s comments late last week. Jaret Seiberg, analyst with the Cowen Washington Research Group, said implications Carson made in regards to the False Claims Act and premium cuts led him to believe that the FHA may give the GSEs a run for their money competition wise. During his testimony before the House Financial Services Committee, Carson said that the Trump administration is working to change the False Claims Act policy...