FHA and VA single-family originations fell in the fourth quarter of 2017 due to a decline in purchase mortgage originations that was offset somewhat by an increase in refinance business. FHA endorsed $237.3 billion in forward single-family mortgages in 2017 notwithstanding an 11.9 percent drop in the fourth quarter. FHA production also dropped 7.1 percent year-over-year. Market observers attributed the decline in FHA originations to high mortgage insurance premiums, stiffer competition from private lenders’ low-downpayment programs, and a more aggressive conventional-conforming mortgage market. A new analysis by Inside Mortgage Finance also found that government-backed lending and the jumbo market saw the biggest production declines from the prior quarter. In particular, IMF’s research found that FHA, VA and U.S. Department of Agriculture rural-housing originations fell ... [Charts]

Analysts are monitoring prepayment speeds to see if Ginnie Mae’s efforts to curb serial refinancing or loan churning are having an impact. Wells Fargo Securities analysts said a conversation about churning has started with a handful of Ginnie mortgage-backed securities issuers, which “should be a net benefit for MBS,” especially for higher coupons where outlier speeds are most prevalent. In a recent alert, the analysts said the momentum continues to build to curb churning of VA loans following notification of lenders suspected of engaging in the activity. Nine issuers have received written warnings based on unusual prepayment rates in VA-backed MBS. Such deviations from market norms for an extended period are not acceptable because they put veterans’ earned benefits at risk, the agency said. The outliers were discovered after a comprehensive review of issuer performance and ...

Issuers Ginnie Mae had targeted for allegedly churning VA loans have denied engaging in the practice. Flagstar Bank and NewDay Financial said they have policies and procedures to prevent churning, or serial refinancing, but offered no explanation as to why they were on Ginnie’s list. Both companies were among the nine issuers Ginnie notified earlier this month for performance that “is materially worse than its peers as to be an outlier.” The agency made its determination after analyzing pool characteristics of all issuers. The analysis revealed an unusually higher prepayment rate for securitized VA loans over a long period for all nine issuers compared to other issuers. “Under the analysis, [a] handful of issuers was shown to be consistent material outliers over an extended period,” said Ginnie. “The [review] identified market participants whose pool performance clearly and persistently deviates from ...

FHA is offering new options to victims of hurricanes Harvey, Irma and Maria as well as California wildfires and subsequent flooding and mudslides to avoid foreclosures. Eligible disaster victims in Texas, Louisiana, Georgia, Florida, South Carolina, California, Puerto Rico and the U.S. Virgin Islands may get FHA foreclosure relief, which would allow them to remain in their homes and, at the same time, reduce losses to the mortgage insurance fund. FHA has instructed servicers to reach out to the victims with the new option, “Disaster Standalone Partial Claim.” The new option allows an interest-free second loan to cover up to 12 months of missed mortgage payments. The loan is payable only when the borrower sells the home or refinances the mortgage. The expanded loss mitigation will also streamline income documentation and other requirements to expedite relief to struggling homeowners while they are ...

IG Looking into Role Secretary’s Family Plays at HUD. The Department of Housing and Urban Development’s inspector general is looking into the role members of Secretary Ben Carson’s family have played at the agency, CNN reported this week. According to the report, Carson himself called for the IG review following an earlier Washington Post report that HUD officials are raising ethics questions about the activities of Carson’s son and daughter-in-law at the agency, including helping to organize a listening tour for the new secretary in Baltimore last year. HUD’s lawyers reportedly warned Carson of a potential violation of federal ethics rules, according to an internal memo the Post obtained through the Freedom of Information Act. Ginnie Mae MBS Outstanding Increases to $1.9 Trillion. Ginnie Mae’s mortgage backed-securities issuance totaled $36.4 billion in January, which included ...

Ginnie Mae’s recent action to curb loan churning and faster prepayments will not be the last as the agency strives to protect veteran borrowers and investors against predatory refinancing practices, according to analysts.

The average daily trading volume in agency MBS totaled $236.1 billion in January, the highest reading of the past year, and a sign that liquidity is strong. Compared to the month prior, trading activity increased by 12.8 percent, according to the Securities Industry and Financial Markets Association.

The credit-risk transfer market created in recent years by Fannie Mae and Freddie Mac is better poised to warn of systemic risk than the MBS market was prior to the financial crisis, according to new research by Susan Wachter of the University of Pennsylvania’s Wharton School.

The Securities and Exchange Commission completed an enforcement action last week against Deutsche Bank Securities and a former head trader at the firm regarding sales of commercial MBS between 2011 and 2015.

Prices for jumbo mortgages softened near the end of 2017 and then markedly improved in the first two months of this year, according to officials at Redwood Trust. “As they often do, market conditions rebounded in January and we took full advantage,” Dashiell Robinson, an executive vice president at Redwood, said this week during the real estate investment trust’s earnings call. The company priced five non-agency mortgage-backed securities in January and February at much better execution ...