Approximately $191.8 billion in FHA-insured mortgage loans were securitized during the first nine months of 2015, surpassing the $158.1 billion of FHA loans that were placed in Ginnie Mae pools last year, agency loan-level data show. Securitized FHA purchase loans accounted for $111.7 billion of Ginnie Mae mortgage-backed securities issued over the same period. FHA refinance securitization totaled $66.8 billion. Modified FHA loans were also included in Ginnie MBS totals. The FHA loans in Ginnie MBS had an average loan-to-value ratio of 92.9 percent and an average FICO score of 677.5 percent, reflecting the single-family program’s traditional borrower base. The loans had an average debt-to-income ratio of 39.8 percent. FHA loans accounted for 19.8 percent of loans that underlie Fannie Mae, Freddie Mac and Ginnie Mae MBS. On the other hand, the same loans accounted for 41.2 percent of insured loans in ... [ 1 chart ]

HUD-IG Issues Industry Warning Against HECM Refi Scam. The inspector general of the Department of Housing and Urban Development has issued an alert to warn lenders, originators and sponsors about fraudulent appraisals that are being used to inflate reverse loan amounts in order to qualify borrowers for HECM financing. Auditors have reviewed HECM refinances over the last several years and have found indications of fraud in hundreds of HECM loans, the IG said. Specifically, appraised values were inflated by 60 to 100 percent or more above the collateral’s actual market value. FHA Announces Lender Recertification Webinar. The FHA will present an online webinar that will assist FHA lenders with the upcoming lender recertification process. Scheduled for Dec. 15, 2015, 2 p.m. to 4 p.m., EST, the webinar will provide details and tips on how FHA lenders can submit an ...

The Federal Housing Finance Agency “should require the GSEs to be much more transparent in their risk-sharing transactions,” said the Urban Institute in a new report.

Fannie Mae and Freddie Mac sold $12.58 billion of credit risk through their popular back-end risk-transfer deals during 2015, according to a new Inside MBS & ABS tally of new issuance in the Connecticut Avenue Securities and Structured Agency Credit Risk platforms. While that was up 16.8 percent from the total for 2014, observers continue to call for more diversification in the government-sponsored enterprises’ risk-transfer activities, and greater transparency. The Federal Housing Finance Agency “should require...[Includes one data table]

Separate appeals courts this week vacated legal victories that the federal government achieved in the aftermath of the financial crisis. The cases involve former officials at State Street Bank and Trust and a former MBS trader at Jefferies & Company. In 2014, commissioners of the Securities and Exchange Commission voted 3-2 to reverse a ruling by the SEC’s Chief Administrative Law Judge involving James Hopkins, a former vice president and head of North American product engineering at State Street, and John Flannery, a former CIO at the bank. The ALJ had dismissed...

The Department of Justice plans to use the tactics that it employed in cases involving the financial crisis and MBS in efforts going forward to combat financial fraud, according to agency officials. “It is hard to overstate the creativity of this effort,” Michael Blume, director of the consumer protection branch at the DOJ, said during a speech late last week. He called it “a loosely centralized effort, employing civil penalty statutory provisions, involving close cooperation with regulatory experts and leveraging resources from the entire country.” He noted...

Mortgage securitization rates have been moving higher in 2015 as ongoing new issuance catches up with this year’s surge in primary market originations. A new Inside MBS & ABS analysis reveals that 69.2 percent of the loans originated through the first nine months of 2015 have been pooled in residential MBS, up from the 67.8 percent securitization rate for all of last year. The mortgage securitization rate had dropped...[Includes one data table]

This lender said finding good appraisers can sometimes be a challenge and predicted that eventually appraisals on such mortgages could cost upwards of $1,000…

Standard & Poor’s rated some $84.64 billion of non-mortgage ABS issued in the U.S. during the first nine months of the year, making it the top rating service in the segment, according to a new ranking by Inside MBS & ABS. S&P was well represented in all the major ABS sectors, with its strongest showing in credit card ABS, where it rated 73.4 percent of 2015 issuance based on dollar volume. Fitch Ratings was...[Includes two data tables]

The securitization of non-agency, nonprime residential loans appears to be heating up as 2015 draws to a close, but bond sizes continue to be – expectedly – quite small. Then again, that’s not the point of these deals, lending executives and investment bankers involved in the market, argue. The idea is to set the table by issuing securities backed by loans that fail to meet the qualified-mortgage test in the hope that, down the road, bond sizes will increase. Earlier this month, according to a report by Bloomberg, Lone Star Funds issued...