Ocwen Financial’s dry spell of acquiring nonperforming FHA loans out of Ginnie Mae mortgage-backed securities pools ended in early December with the nonbank servicing giant buying $253.1 million of delinquent product. Speculation, however, is mounting that Ocwen may not be long for the Ginnie Mae business, at least as a servicer. Ocwen’s disclosure of the “early” FHA buyouts came 11 days after it sold to an undisclosed buyer. In the first quarter, the company engaged in $646 million of early buyouts (EBO) and followed up with a $490 million EBO deal in the second quarter. However, EBO volume fell to zero in the third quarter. The December acquisition came in one fell swoop raising cautious, short-term expectations at Ocwen. “We expect to execute more such purchases in the next few months, as long as market conditions are favorable,” said Chief Investment Officer John Britti. As fast as it had ...

The FHA and Ginnie Mae will share in the record-setting $16.7 billion settlement between Bank of America, the Department of Justice and certain other federal agencies and six states to resolve claims related to mortgage fraud and toxic mortgage-backed securities. The FHA will receive approximately $800 million and an undisclosed amount for consumer relief from BofA. The bank was accused of falsely certifying poorly underwritten loans for FHA insurance, resulting in huge losses for the agency. It is unclear how much Ginnie Mae’s share would be from the settlement. “As a direct endorser of FHA-insured loans, Bank of America performs a critical role in home lending,” said U.S. Attorney Loretta Lynch for the Eastern District of New York during the announcement of the global settlement in August. “In obtaining a payment of $800 million and sweeping relief for troubled homeowners, we have not ...

Thousands of military veterans in high-cost areas may be deprived of VA’s home-loan guarantee benefits unless Congress extends the current VA loan limits before the end of the year. Those loan limits expire on Dec. 31, 2014. The VA loan limits are based on median home values estimated by the FHA, providing loans up to 125 percent of local area median price. The program does not set a cap on how much a veteran can borrow to finance a home purchase but it does limit the maximum amount it can guarantee to 25 percent of the current loan limit. Veteran and industry groups are urging Congress to make the VA limits permanent. A VA spokesperson said the agency was not asked for a position on the issue since Congress did not put forward any bill in any of the hearings this year. “But as a general rule, VA wants to maximize the opportunities ...

Ginnie Mae is seeking comment on several proposed data collections, including those that would strengthen the agency’s ability to monitor participants in its mortgage-backed securities programs. Due to its growing concern over the influx of non-depository issuers into the single-family MBS program, Ginnie has proposed to collect more loan-level data to supplement the information already being collected and reported on a monthly basis. The proposed data collection consists of bankruptcy-related information (action type, case identifier, chapter type, bar date) as well as borrower-related information (borrower bankruptcy indicator, classification type, total mortgaged properties, counseling initiated indicator and credit score date). Other proposed new data include document custodian ID, type of insurance claim coverage, investor unpaid principal balance (UPB), adjustment to ...

The Federal Reserve’s quantitative easing tapering will put a dent in Fannie Mae and Freddie Mac guaranty fee revenues, according to the Federal Housing Finance Agency’s Inspector General. The evaluation report issued by the IG last week concluded that as the central bank pulls back from the mortgage-backed securities market, interest rates will drift higher and the GSEs will do less business, meaning declining g-fee revenue.

Issuers of non-agency MBS should be able to price loans that don’t meet the standards for qualified mortgages at nearly the same levels as QMs, according to Andrew Davidson & Co., a firm that provides risk analytics on non-agency MBS. Non-QMs actually perform better than similar QMs in certain scenarios, as long as underwriting on the products is strong. Beginning in late 2015, non-QMs included in new non-agency MBS will trigger risk-retention requirements. Only mortgages that meet QM standards will be deemed to be qualified residential mortgages and exempt from risk retention. Interest-only mortgages appear...

Roughly $4.7 billion of securities backed by loans on packages of single-family rental units have come to market this year with more on the way between now and yearend. But with real estate values increasing, the “easy money” may be in the past. “So far, all of the transactions we’ve seen have been single-loan deals,” said Nitin Bhasin, a managing director within Kroll Bond Rating Agency’s structured finance group. Bhasin anticipates...

Underwriting trends for jumbo mortgage-backed securities were mixed as of the third quarter of 2014, according to an analysis by Inside Nonconforming Markets. While some issuers started to include mortgages with higher loan-to-value ratios, average combined LTV ratios in jumbo MBS were actually higher for deals issued in the fourth quarter of 2013 than those priced in the third quarter of 2014. Average credit scores on issuance for the third quarter were ... [Includes one data chart]

Ginnie Mae this week provided new details to the long-anticipated plan for increased issuer net worth and liquidity and a new performance scoring method for issuer activity – changes that could adversely affect small issuers and portfolio servicers. In remarks at the Mortgage Bankers Association’s annual convention in Las Vegas, Ginnie Mae President Ted Tozer said the changes are part of a larger effort to ensure the continuing flexibility and availability of the agency’s mortgage-backed securities program to as many entities as possible. New types of issuers and counterparties have entered the agency-backed MBS market in the wake of the financial crisis, which called for adjustments and tailored approaches to the evolving housing finance market, Tozer noted. Tozer said both policy changes and staff expertise will ensure the success of ...

While the FHA’s share of the primary insurance market has dropped significantly since premiums were hiked in early 2013, the VA program and the rural housing loan program run by the Department of Agriculture are going strong, according to agency officials. During a panel discussion at the Mortgage Bankers Association annual convention this week, VA and Rural Development executives said that both agencies have been quietly building mortgage market share. Jeffrey London, deputy director of the VA’s loan guaranty service, reported that purchase-mortgage VA loan originations were up 11 percent in fiscal 2014, with 40 percent of the business being first-time homebuyers. Of that group, 80 percent took no-downpayment VA loans, the biggest selling point in the program, along with its relatively low costs. In earlier remarks, Housing and Urban Development Secretary Julian Castro revealed that ...