Reverse mortgage lenders now have the option to delay calling a Home Equity Conversion Mortgage due and payable where there is an eligible non-borrowing spouse and a case number assigned prior to Aug. 4, 2014. A delay would postpone foreclosure triggered by the death of the HECM borrower or the last surviving borrower and allow the qualified, non-borrowing spouse to stay in the house for a certain period until the HECM is resolved. Under revised FHA guidance, reverse mortgage lenders are allowed to assign eligible HECMs to the Department of Housing and Urban Development upon the death of the borrower. They have the option of foreclosing in accordance with the contract as endorsed or choose the “mortgagee optional election assignment (MOE).” MOE means the optional assignment selected by a lender for a HECM loan with an assigned FHA case number prior to ...

The Mortgage Bankers Association notched a win for small, independent issuers after the Financial Accounting Standards Board agreed with the group’s position on the accounting of seriously delinquent loans in Ginnie Mae pools. At issue is whether companies that service pools with loans that are 90 days or more delinquent should put those loans on their balance sheet even if they have no intention of buying the loans out of the pool. According to the MBA, a Big Four accounting firm issued controversial guidance which would have been burdensome for small mortgage-backed securities issuers that have limited funding and no incentive or history of buying defective loans out of pools. After months of exchanges, FASB staff finally agreed with the MBA’s view that the decision process involves two steps. First, a loan must be 90 days or more delinquent and trigger ...

Overall, 2014 was not a good year for FHA originations as tight underwriting and high loan costs narrowed the band of borrowers able to qualify for an FHA-insured residential loan, according to an Inside FHA Lending analysis of agency data. FHA total endorsements dropped to $35.2 billion, an 8.1 percent drop in the fourth quarter from the previous quarter, with fixed-rate and adjustable-rate mortgages declining by 7.9 percent and 12.7 percent, respectively. FHA purchase originations suffered a decline of 11.3 percent. There was one bright spot: FHA refinances rose a meager 2.2 percent while the percentage of conventional loans that refinanced into FHA saw a more substantial lift of 13.0 percent quarter to quarter. FHA baseline lending (below $417,000) saw volume drop 8.4 percent in the fourth quarter. FHA jumbo loan amounts up to the statutory high-cost loan limit and ... [ 2 charts ]

Fannie Mae and Freddie Mac are more than halfway towards reaching their goal of reducing their retained mortgage portfolios to no more than $250 billion each by 2018, according to Federal Housing Finance Agency Director Mel Watt. Testifying before the House Financial Services Committee this week, Watt said the two government-sponsored enterprises have developed plans to meet their investment targets, $250 billion each, in accordance with terms of their conservatorship. As of Sept. 30, 2014, Freddie’s portfolio stood...

Mortgages included in jumbo mortgage-backed securities in 2014 showed some shifting characteristics while maintaining strong underwriting overall, according to a new analysis by Inside Nonconforming Markets. Looser underwriting on jumbo mortgages has largely been at the fringes: some MBS have included a cluster of mortgages with combined loan-to-value ratios of 80 percent, a few borrowers with credit scores below 680 and ... [Includes one data chart]

Redwood Trust, Credit Suisse and Two Harbors Investment are working on separate jumbo mortgage-backed securities that will be issued next week. The deals vary slightly by issuer, including some non-qualified mortgages in Redwood’s deal and sunset provisions on representations and warranties on Credit Suisse’s jumbo MBS. Redwood’s $338.80 million Sequoia Mortgage Trust 2015-1 is set to receive AAA rating with credit enhancement of 7.25 percent ...

Cove Financial, a lender that offered a unique rent-to-own program, went out of business at the end of 2014. The company recently notified loan originators offering its Mortgage Alternative Program that Cove “is no longer conducting business or offering MAP.” Officials said vendors and others that have partnered with the company will be contacted by an assignee for the benefit of creditors. The lender added that the closure doesn’t impact borrowers ...

Kroll Bond Rating Agency updated the default and loss model the firm uses for non-agency mortgage-backed securities last week. Among other changes, the rating service reduced its loss expectations for purchase mortgages, reduced assumed timelines for foreclosures and formalized the penalty for mortgages with debt-to-income ratios above 45.0 percent. Titan Capital Solutions announced this week that it will purchase mortgages ... [Includes five briefs]

Streamlined FHA refinance volume increased slightly in the third quarter of 2014 as incentives put in place in 2013 continued to attract FHA borrowers, according to an Inside FHA Lending analysis of agency information. Streamlined refi production rose 2.4 percent in the third quarter of last year, closing a nine-month period with $14.2 billion in new loans. A comparison of nine-month FHA-to-FHA refinance activity, however, shows volume falling a hefty 79.6 percent year over year. As of Sept. 30, 2014, streamlined refinances accounted for 14.3 percent of total FHA originations. The FHA announced a revised streamlined refi program in December 2013 to help FHA borrowers with underwater mortgages to refinance without added cost or penalty. The loan does not require an appraisal or verification of job, income or credit. A perfect, three-month payment history is required and ... [ 1 chart ]

Issuers of non-agency MBS finished 2014 with a flourish, as production totaled $10.63 billion in the fourth quarter, according to a new Inside MBS & ABS analysis and ranking. But despite a 4.1 percent gain during the fourth quarter, 2014’s total issuance of $35.14 billion came up 9.6 percent short of the total for 2013. The only sector that showed any growth last year was the scratch-and-dent market, where issuance was up 17.6 percent from 2013. In fact, securitization of nonperforming and re-performing mortgages accounted for...[Includes three data charts]