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 ]

Quicken Loans’ chief executive officer reiterated threats by company owner Dan Gilbert to exit the FHA business amid concerns about a forthcoming lender-certification rule and an ongoing court battle with the Department of Justice. A report by Reuters quoted Gilbert earlier this week as saying he is considering pulling Quicken Loans out of the FHA market. In an interview with IMFnews, Quicken CEO Bill Emerson said top management would be remiss if it did not think about exiting the business. Quicken will decide whether to stay or go after the FHA releases its revised rule on lender certification later this month, he said. The revised proposal restores a provision initially removed from the original proposal, which would require lenders to certify that neither the firm nor its officers have been suspended, debarred or excluded from participation in any federal agency transactions. In addition, the revised proposed rule requires ...

An Urban Institute analysis echoed observations in the FY 2015 actuarial audit of the FHA Mutual Mortgage Insurance Fund, calling for the separation of the highly volatile reverse mortgage portfolio from the fund. Assessing the performances of the larger forward mortgage portfolio and the smaller Home Equity Conversion Mortgage portfolio when determining FHA’s financial status results in an inaccurate picture, warned Laurie Goodman, director of the institute’s Housing Finance Policy Center. Including the highly unstable, unpredictable HECM business in FHA’s solvency calculation severely distorts the fund’s true financial condition, she said. Goodman’s dire warning puts a damper on the actuarial audit, which, for the first time since 2009, reported the fund’s capital ratio over the 2.0 percent statutory threshold, up from 0.41 percent in FY 2014 and a year earlier than projected in the ...

The jumbo mortgage business has been a growth market for the past few years but the sector lost a little ground in the third quarter, according to a new Inside Mortgage Finance ranking and analysis. An estimated $117.1 billion of mortgages exceeding the baseline conforming loan limit of $417,000 were originated during the third quarter. That included $85.0 billion of loans that were too big to be securitized by Fannie Mae, Freddie Mac or Ginnie Mae, plus another $32.1 billion of agency-eligible jumbo mortgages in high-cost markets. Total jumbo volume was...[Includes three data tables]

Some market analysts see an investment opportunity brewing in subprime auto ABS in the coming year, despite increasing regulatory attention. But certain rating analysts are emphasizing the rising losses the sector has been seeing for the last few months, and a few contrarians think the market is either poised to enter bubble territory or is already there. Consumer ABS analysts at Wells Fargo Securities are recommending subprime auto subordinated bonds rated BBB, convinced they offer good value on a risk-adjusted basis. With spreads set to finish 2015 at historically wide levels (excluding the financial crisis), the analysts expect...

American Homes 4 Rent, the largest publicly traded player in the single-family rental market, late this week agreed to buy American Residential Properties in a deal valued at $1.5 billion. It was the second transaction involving real estate investment trusts in the SFR sector within three months, and has sparked talk of further consolidation, including perhaps mortgage REITs. A research note from Keefe, Bruyette & Woods, penned right before the AH4R-ARP combination was unveiled, noted that mergers in the space are possible “given current valuation discounts ….” In other words, the share prices of single-family rental REITs have been...

For a sector that originates, at best, $5 billion a year, the fledgling subprime mortgage industry is garnering a bit of attention these days, though most investors do not publicize their interest. One nonprime executive who has received funding and spoke under the condition his name not be used described his suitors as hedge funds, private-equity firms and real estate investment trusts. He also mentioned “rich” individuals looking to put money to work. To date, the largest investment in a subprime/non-agency lender appears...

Wells Fargo is reportedly under investigation for a practice that banks across the industry have relied on for years: cross-selling financial products to their customers. Big banks have been particularly upfront about how they see jumbo mortgages originated for portfolio as a way to cross-sell other products. Cross-selling financial products occurred without much regulatory scrutiny until a lawsuit by the Los Angeles City Attorney in May. LA City Attorney Mike Feuer alleged that Wells’ cross-selling activities violated California’s unfair competition law. The Office of the Comptroller of the Currency and the Federal Reserve Bank of San Francisco are also reportedly investigating Wells’ cross-selling. Feuer alleged...

Combining the Home Equity Conversion Mortgage program and the traditional forward mortgage program in assessing the soundness of the FHA Mutual Mortgage Insurance Fund could produce inaccurate results and ill-advised policy changes, warned the Urban Institute. Analysts at the institute said the FHA’s basis for assessing the MMI Fund’s solvency creates a distorted picture of the value of the fund and that the agency should separately assess its forward and reverse mortgage businesses to get an accurate picture of their performance and impact on the fund. The FY 2015 actuarial report drew...

A handful of publicly traded real estate investment trusts have been quietly making inquiries about buying residential loans that do not meet the qualified mortgage standard, including subprime credits and even unsecured consumer loans, according to players on both sides of the equation. One executive who manages a REIT that plays in the jumbo market admitted as much in an interview with Inside MBS & ABS, but pointed to one major deterrent: the Consumer Financial Protection Bureau. “We’ve tried to get clarifications from them on such things as the ability-to-pay rule, but they haven’t been very helpful,” he said. The source noted that his REIT has so far avoided buying any nonprime, non-QM loans, saying he fears the regulator will ...