A new loan origination defects and remedies framework to reduce buybacks was released by the government-sponsored enterprises last week, and lenders who spoke with Inside MBS & ABS said it may not be groundbreaking, but it is a step in the right direction. Jeremy Potter, general counsel and chief compliance officer with Norcom Mortgage, said, “We were really happy with the outcome. It seems like the industry has been working with them and this is a good team effort.” He said...
Rep. Andy Barr, R-KY, used a recent hearing by the House Financial Services Committee as an opportunity to promote a bill that would grant qualified mortgage status to loans held in portfolio. He was particularly critical of an exemption in QM standards that currently applies to mortgages eligible for purchase by the government-sponsored enterprises. Such loans can have debt-to-income ratios above 43 percent and still be deemed safe-harbor QMs. “The policy is counterproductive ...
Nonbanks comprised a significant portion of Ginnie Mae business as independent mortgage companies replaced banks as primary securitizers of FHA and VA loans. In the third quarter of 2015, mortgage companies accounted for 60.8 percent of VA loans and 67.1 percent of FHA loans securitized in Ginnie pools. For mortgage companies, production of Ginnie mortgage-backed securities backed by FHA loans increased by 5.0 percent in the third quarter from the previous quarter and was up a whopping 118.1 percent during the first nine months of 2015 over the same period last year. Nonbank securitization of VA loans rose by a modest 1.5 percent quarter over quarter and by 83.6 percent over the nine-month period compared to the same period last year. Megabanks, whose assets exceed $1 trillion, were the second largest issuers of Ginnie Mae MBS, accounting for less than ... [3 charts]
Some observers say the reduction in the annual mortgage insurance premium earlier this year has put the FHA Single Family Mutual Mortgage Insurance Fund on an accelerated path to recovery. Whether that is enough to get the fund back to its statutory 2 percent capital reserve ratio remains to be seen. The FHA is getting stronger faster, said Brian Chappelle, a mortgage industry consultant, in an analysis foreshadowing the FHA’s November actuarial report on the state of the MMIF. Last year’s independent actuary projected FHA’s total loan production in 2015 at $124 billion, but the MIP cut has led to a 60 percent increase in the volume forecast, said Chappelle. In all likelihood, the FHA could be looking at more than $200 billion in total originations this year, he predicted. “When a business lowers its prices, it’s going to make it up in volume,” the consultant noted. “Thus, FHA revenue is going to be ...
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