Although unhappy about the demise of the popular, fixed-rate, standard Home Equity Conversion Mortgage, loan officers are not worried about any long-term adverse effect on their FHA businesses. In fact, members of the National Reverse Mortgage Lenders Association, support the FHA’s decision, which is a part of a broad effort to strengthen and better manage the risk of the agency’s Mutual Mortgage Insurance Fund. They said they have other HECM products to offer in lieu of the standard HECM loan. Beginning April 1, borrowers who choose a fixed interest rate will be limited to ...

Responding to industry concerns over the impact of the new loan officer compensation final rule on reverse mortgages, the Consumer Financial Protection Bureau has clarified the phrase “amount of credit extended” for closed-end Home Equity Conversion Mortgage loans. For closed-end reverse mortgages, a loan originator’s compensation may be based on either (a) the maximum proceeds available to the consumer under the loan; (b) the maximum claim amount (if the loan is subject to the Department of Housing and Urban Development’s HECM rules); or (c) the appraised value of the property, as determined by ...

California and Texas took the honors for top FHA producers among states and other U.S. jurisdictions in 2012, with a combined $59.2 billion in new mortgage loans insured by the FHA. The combined output of the two states represented 25.5 percent of the $232.1 billion in new FHA originations reported by all 50 states, Puerto Rico, Guam, the U.S. Virgin Islands and the District of Columbia for the entire year. Total FHA production by state was up a modest 5.2 percent in the fourth quarter from the previous quarter and a hefty 21.9 percent from the prior year. California, which accounts for 25 percent of the U.S. housing market, reported ...

The ability-to-repay rule issued by the Consumer Financial Protection Bureau will alter originations of non-agency jumbo mortgages somewhat, according to industry analysts. However, pending rules to set risk-retention requirements and define qualified-residential mortgages are a greater concern to non-agency mortgage-backed security market participants. The CFPB’s new ATR rule included special treatment for “qualified mortgages,” including a temporary exception (for up to seven years) for all agency ...

The volume and market share of non-agency jumbo mortgage-backed security issuance increased significantly in 2012 compared with other post-crisis years. However, volume remains well below activity seen even before the 2005 boom in non-agency MBS issuance. Some $3.46 billion in non-agency jumbo MBS were issued last year, according to the Inside Mortgage Finance MBS Database, more than four times the volume issued in 2011. Redwood Trust issued six deals last year totaling ... [Includes one data chart]

After including a significant amount of ARMs in its first deal of 2013, Redwood Trust relied largely on 30-year fixed-rate mortgages for its second non-agency jumbo mortgage-backed security of the year, according to presale reports released this week. The $666.13 million Sequoia Mortgage Trust 2013-2 is set to receive a triple-A rating with characteristics largely similar to other recent issuance from the real estate investment trust. While ARMs accounted for 21.0 percent of the dollar volume of SEMT 2013-1 ...

New rules from the Consumer Financial Protection Bureau require servicers to consult with loan owners regarding the loss mitigation process and increase reporting of loss mitigation activity. Senior officials at the CFPB said they have received complaints that servicers are not offering loan modification options allowed by loan owners, including non-agency mortgage-backed security investors. A senior CFPB official said servicers do not always have strong incentives to offer ...

Arch Bay Capital, once one of the most active buyers of nonperforming residential loans, has sold most of its NPL portfolio and is launching a company that will originate non-agency mortgages, according to industry officials who have been briefed on the plans. One source who has done business with Arch Bay told Inside Nonconforming Markets that the working name of the lending unit under construction is 5 Arch. The company, based in Irvine, CA, “seems to be expanding at a good pace” according to the source ...

The already deflated subprime market will likely stay depressed due to the Consumer Financial Protection Bureau’s new ability-to-repay rule, according to industry analysts. The rule singled out higher-priced mortgage originations, offering such loans fewer protections than similar prime mortgages in the form of a rebuttable presumption instead of a safe harbor from litigation. “Not many rebuttable-presumption loans will be made by lenders, and they will carry higher rates due to the ...

Loan originator compensation requirements released this week by the Consumer Financial Protection Bureau aim to prohibit steering to subprime mortgages. The CFPB noted that during the subprime boom, some borrowers who would have qualified for prime loans were steered into subprime loans, with the steering largely tied to LO compensation. “Before the financial crisis, many mortgage borrowers were steered towards risky and high-cost loans because it meant more money for the loan originator,” said Richard Cordray ...