FHA originations rose significantly in the first quarter of 2016 from the same period last year even as VA loan production decreased slightly, according to an analysis of Ginnie Mae data. Lenders delivered $54.4 billion of FHA-insured loans to Ginnie Mae for securitization during the first three months, up 36.2 percent from the previous year. In contrast, the volume of VA loans securitized over the same period, $35.0 billion, fell 1.5 percent compared to the same period a year ago. A strong purchase-mortgage market drove FHA activity from January to March. The reduction in FHA’s annual insurance premium in January 2015 continued to have an impact on FHA’s purchase-loan market share. In 2015, FHA purchase originations accounted for $151.0 billion of the estimated $881.0 billion in total purchase originations (conventional and government single-family forward originations), according to ... [ 2 charts ]

A California-based mortgage lender and six senior executives have agreed to pay $12.7 million to the Securities and Exchange Commission to resolve allegations they schemed to defraud investors in the sale of residential mortgage-backed securities with a Ginnie Mae guarantee. The SEC complaint alleged that, from March 2011 to March 2015, Ginnie Mae issuer First Mortgage Corp. and its top executives pulled current performing loans out of Ginnie Mae MBS. The issuer falsely claimed that the loans were delinquent so that it could recycle them as newly issued MBS and sell them at a profit. FMC allegedly issued Ginnie Mae MBS prospectuses with false and misleading information by using a Ginnie Mae rule that allowed issuers to repurchase seriously delinquent loans. In addition, the SEC complaint alleged that FMC deliberately delayed depositing checks from borrowers who had been behind on ...

After nearly five years of legal entanglements, investors will soon receive their share of the $8.5 billion Bank of America agreed to pay in June 2011 to resolve legacy mortgage-repurchase and servicing claims associated with Countrywide Financial Corp. The payouts were delayed by legal wrangling over whether trustee Bank of New York Mellon had the authority to settle. Last year, the New York Supreme Court ruled in the trustee’s favor, and a state court judge recently approved the severance order and partial final judgment, which cleared the way for BNYM to begin distributing the settlement proceeds from 512 of the 530 trusts in the case. Twenty-two investors that suffered significant losses for their failed investment in MBS sold by Countrywide prior to the collapse of the housing market are...

The heavy role of Fannie Mae, Freddie Mac and Ginnie Mae in the post-crisis mortgage market has brought lower rates and considerable liquidity to the mortgage business, but industry leaders question whether private capital can meet the growing need to finance nonbank servicing portfolios and the eventual pullback of the Federal Reserve. “We wouldn’t have the same price we have now without the government being there; its programs provide a 2 to 3 percent discount,” said Stan Middleman, CEO of Freedom Mortgage Corp., during a panel session at the Mortgage Bankers Association’s secondary market conference this week. “They are the whole enchilada. If you took them out, we’d have nothing.” The government-sponsored enterprises are...

The track record of U.S. re-performing loan MBS transactions rated by Fitch Ratings is pretty much what the ratings service expected, and somewhat better than other deals that were not rated, analysts at Fitch said in a new report. “While still very early, the rated transactions issued since 2014 have performed within initial expectations, reflecting positive selection of the borrowers included in the mortgage pools, extensive up-front diligence and supportive transaction structures,” ...

Marketplace lender Social Finance this month received seller/servicer approvals from Fannie Mae, but it remains to be seen just how active it will be in the secondary mortgage market. According to a spokesman for the privately held “SoFi,” the nonbank is now funding roughly $100 million per month in non-agency jumbos. According to firms that have done business with SoFi, it has sold the loans to OneWest Bank and Wells Fargo. To date, the online lender has yet to issue any ...

Retail loan originations account for most new VA lending, but the correspondent channel plays an outsized role in the FHA market, especially in purchase-mortgage lending, according to a new analysis of Ginnie Mae mortgage-backed securities data by Inside FHA/VA Lending. Over half (51.1 percent) of VA loans securitized through Ginnie MBS in the first quarter of 2016 were retail originations, but only 39.1 percent of FHA loans came through that channel. The biggest source of FHA loans was correspondent lenders, which accounted for 45.8 percent of loans securitized during the first three months of this year. That was actually slightly below the 49.2 percent correspondent share of FHA loans back in 2014 and 46.8 percent last year. Correspondents accounted for well over half (53.9 percent) of FHA purchase mortgages during the first quarter, while playing a more ... [ 3 charts ]

A lender that focuses on investment properties is preparing to issue a non-agency MBS backed by adjustable-rate mortgages on residential and commercial properties. The deal shares some characteristics with non-agency MBS backed by new loans, but it’s different in a lot of ways. The planned $358.60 million Velocity Commercial Capital 2016-1 received provisional AAA ratings this week from Kroll Bond Rating Agency. Residential properties account for 55.3 percent of the collateral, with small commercial properties making up the rest. All of the mortgages backing the planned MBS are for investment properties. Velocity Commercial Capital issued...

Underwriting standards on the four prime non-agency mortgage-backed securities issued in the first quarter of 2016 loosened marginally compared with the typical prime jumbo MBS issued in recent years, according to a new analysis by Inside Nonconforming Markets. The combined loan-to-value ratio on prime non-agency MBS issued in the first quarter of 2016 averaged 69.8 percent. That was somewhat higher than the average combined ... [Includes one data chart]

Litigation over legacy residential MBS deals that went sour in the run-up to the financial crisis continued last week, as California Attorney General Kamala Harris sued investment bank Morgan Stanley for alleged misrepresentations about RMBS investments, which she said contributed to huge losses by investors such as the state’s public pension funds. In what is just the second such use of the False Claims Act by a state, Harris’ complaint, filed in San Francisco Superior Court, alleges that Morgan Stanley violated the FCA, as well as California securities law and other state laws, by allegedly hiding or downplaying the risks of complex investments involving large numbers of underlying loans or other assets. Harris used...