FHA lenders are generally supportive of the agency’s proposal to add a new method for evaluating lender performance but may request certain adjustments to ensure they are not at great risk for enforcement action, according to compliance experts. Lenders believe the proposal for an additional performance metric to supplement the lender compare ratio under the Credit Watch Termination Initiative is a positive step toward providing a more well-rounded analysis of a lender’s performance when the FHA is considering further action. “In and of itself, the proposal is not a panacea, but it is certainly a step in the right direction,” said Brian Chappelle, a mortgage industry consultant. The proposal reflects the FHA’s belief that a number of factors influence a lender’s performance, not just its compare ratio. The compare ratio compares a lender’s rate of early defaults and claims to those for ...

The FHA is reportedly considering reinstating “spot” loans in condominium projects that were not on its approved development list to boost FHA-insured condo lending. Spot loans are currently prohibited, but the FHA is said to be reevaluating the product because of reports of first-time homebuyers having difficulty in obtaining FHA financing for condo unit purchases and seniors seeking reverse mortgages to tap the equity in their units. The National Association of Realtors is trying to break the impasse between the FHA and reluctant board of directors of condo projects that do not have FHA certification to resolve the financing issue. FHA-insured condominium lending has dropped to $884.4 million in the first quarter of 2014, down 70 percent from the $2.98 billion in total originations reported in the first quarter of 2013, according to Inside FHA Lending’s analysis of agency data. Even as the NAR tries to ...

Ginnie Mae has prohibited the pooling of Home Equity Conversion Mortgage loans that provide for future draws at a fixed rate of interest starting June 1, 2014. The agency said servicers that are committed to advance funds to borrowers at a fixed rate could become seriously undercapitalized if interest rates rise from the time of origination. “The impact of negative spreads between a fixed note rate and future prevailing rates could be exacerbated in such loans, and endanger the servicers’ capacity to meet their HMBS (HECM mortgage-backed securities) obligations, which require the issuer to maintain the capacity to advance funds as required under the HMBS program,” Ginnie explained in a recent memo to issuers. Program requirements include the funding of draw requests from borrowers and buying all related participations out of pools when the outstanding principal balance of the related HECM loan reaches 98 percent of the maximum claim amount, Ginnie noted. Borrower requests for ...

Ginnie Mae is now approving applications to issue agency mortgage-backed securities in as little time as six months, a far cry from two years ago when it took as long as 24 months, according to figures provided to Inside FHA Lending. In fiscal year 2013, which ended September 30, the agency approved 77 out of 122 new issuer applications. Since the beginning of the current fiscal year through April, the agency has processed 47 new applications resulting in 20 approvals. A spokesman for Ginnie noted that the number of applications processed in fiscal 2014 was impacted “by the government shutdown” but also by the development of a new online application tool that will be rolled out this year. “The time it takes to get a Ginnie Mae approval has been getting better – as in faster,” said David Lykken, managing partner of Mortgage Banking Solutions, a consulting and advisory firm. “It’s true that the number of ...

The Department of Housing and Urban Development has outlined steps FHA lenders must take following the successful deployment of a new system for requesting changes and notifications as well as completing their annual recertification.The changes became effective on May 27, 2014, as the new system, Lender Electronic Assessment Portal (LEAP), went live. All of FHA’s approximately 2,500 approved lenders will now use LEAP for their annual recertification and business updates and changes. Senior HUD officials, who requested anonymity, said the transition from the Lender Assessment Subsystem (LASS) and the Institution Master File (IMF) to LEAP is almost complete, except for a few kinks HUD staff is working out. “The change in the IMF is noteworthy because it was the repository for information about all FHA lenders and it had been operating on outdated technology for a long time,” said one agency executive. “All essential information about all FHA lenders is now consolidated in a ...

HUD Nominee Picks Up Support from Grassroot Activists, Home Builders. San Antonio Mayor Julian Castro, President Obama’s pick to replace Secretary Shaun Donovan at the Department of Housing and Urban Development, has won support from the National Community Reinvestment Coalition and the Center for Responsible Lending and the National Association of Home Builders. “Mayor Castro’s experience and strong commitment to neighborhood revitalization and community development will be critical to the recovery of communities still reeling from the housing crisis,” said NCRC President and CEO John Taylor. “We welcome his leadership and look forward to working in partnership with him to increase access to affordable housing and create vibrant, healthy communities.” CRL President Mike Calhoun noted Castro’s long record of ...

With interest rates dropping in recent weeks, some mortgage observers say there’s a chance that the refi market could rebound.

And it doesn't appear that Millennials are willing to give you much to save for a mortgage downpayment either.

While lenders affiliated with homebuilders tend to lend to riskier borrowers than other originators, their mortgages actually perform better, according to new research published by the Federal Reserve Bank of Chicago. The researchers suggest that the stronger performance is related to the hands-on nature of homebuilder lending, among other factors. The Chicago Fed published the findings in a study authored by Sumit Agarwal, Gene Amromin, Claudine Gartenberg, Anna Paulson and Sriram Villupuram, who note that their findings run counter to assumptions about the quality of builder-affiliate originations. “At first glance, the allegations of the nefarious role played by the homebuilders in the crisis are consistent...

Lenders that upstream product to the megabanks through correspondent loan sales are beginning to worry that because profits were so weak during the first quarter – or nonexistent – they might be cut off as sellers. Moreover, lenders fret that some of the largest players might shut the door on them for a different reason: they can’t deliver enough volume in an origination-challenged market. Speculation has focused...