Ginnie Mae’s anti-churning efforts have narrowed the spread between Ginnie and Fannie Mae mortgage-backed securities, prompting executives to say things are almost back to normal. In an interview with Inside FHA/VA Lending this week, Michael Bright, executive vice president and chief operating officer at Ginnie Mae, said the market and investors have responded positively to the agency’s efforts to resolve the churning and prepayment problems. “The Ginnie spread has fallen almost half a point and our securities have become more liquid,” he said. “We want to make sure we’re giving investors CPRs (constant prepayment rates) that they can model.” Bright said he cares less about the overall level of prepayment speeds. What he truly cares about is ensuring that when an investor purchases a Ginnie security, the prepay speed is correlated to changes in the interest rates and not the ...
FHA streamline refinancing fell significantly in 2017 from the previous year, according to an Inside FHA/VA Lending analysis of agency data. Lenders closed 2017 with $37.4 billion of FHA streamline refi loans, buoyed by a 12.2 percent increase in origination in the fourth quarter. However, business was down a whopping 34.5 percent year-over-year. The segment ended the first quarter strongly with, $13.05 billion, but faltered over the next nine months. Streamline refinancing accounted for 15.8 percent of total FHA originations in 2017. Twelve states, led by California, each reported FHA streamline refi originations in excess of $1 billion last year. The Golden State closed the year with $8.05 billion of FHA-to-FHA refis, which accounted for 21 percent of all FHA loans in the state last year. The highest FHA streamline refi-producers after California were, in sequential order, ... [Charts]
Ginnie Mae’s credit-risk sharing concept is generating a lot of excitement among private credit enhancers, according to the company’s acting president. A planned risk-sharing pilot with FHA scheduled for later this year has the industry on its toes, said Michael Bright, executive vice president and chief operating officer of Ginnie Mae, during an interview this week with Inside FHA/VA Lending. “There is a line out the door of private companies willing to provide and take on credit risk and work with us on transactions where private capital would assume some of the risk,” he said. Ginnie is currently looking at ways to facilitate risk sharing between FHA and a private third party that would assume a first-loss position on a Ginnie security backed by FHA loans. Bright brought up the idea during remarks at the Structured Finance Industry Group conference in Las Vegas in February. He has been fielding calls since from ...
FHA insured approximately $1.9 billion of ineligible mortgage loans made to borrowers with delinquent federal debts or who are subject to federal administrative offset for past-due child support payments, according to the Department of Housing and Urban Development’s inspector general. Approximately 9,500 loans were ineligible because the sources used by lenders to identify ineligible borrowers lacked sufficient information to raise red flags. In addition, FHA failed to guide lenders adequately in reviewing child support payments, the IG said. Federal law prohibits loans, loan guarantees or insurance to delinquent federal debtors, including those with delinquent child support subject to administrative offset, until the delinquency is resolved. Auditors drew a statistical sample of 60 loans from 13,927 FHA-insured loans that closed in 2016 and analyzed data on their related borrowers in the ...
The adjustable-rate mortgage share of total first-lien originations increased in 2017, according to a new ranking and analysis by Inside Nonconforming Markets. While originations of ARMs were essentially flat during the year, total first-lien production declined, boosting ARM share. ARMs accounted for 11.9 percent of total originations in 2017, up from a 10.3 percent share the previous year. An estimated $216.0 billion of ARMs were originated ... [Includes one data chart]
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