Lenders are at odds with housing finance agencies over the benefits of a new FHA guidance, which calls for documentation of downpayment assistance (DA) that HFAs provide to borrowers. The new guidance requires mortgagees to show written proof that funds provided by a federal, state or local government entity to help borrowers meet the FHA’s 3.5 percent minimum cash investment requirement actually came from the entity and not from some impermissible source. The guidance follows up on a rule issued by HUD last year clarifying an interpretation of the National Housing Act. The rule expressed HUD’s view that ...

A recent Federal Reserve survey of bank lending practices further confirmed a continuing trend among FHA lenders of refusing to lend to borrowers with FICO scores below 620 even though they qualify for the loan and could afford the required minimum 3.5 percent cash investment. About a third of senior loan officers who responded to the April 2013 survey indicated they were less likely to approve FHA home-purchase loan applications within the 580-620 FICO range this year compared to last year. They prefer lending to borrowers with a 720 FICO and who are making a 10 to 20 percent downpayment, the survey showed. An estimated 75 percent of banks cited the ...

The Texas House of Representatives has approved legislation that will let voters decide on Nov. 5 whether to allow home-equity purchase lending in the Lone Star State. The bill would amend the Texas constitution to authorize Home Equity Conversion Mortgage for Purchase loans, which would make the program available to Texans for the first time. The state legislature voted 139 to 1 in favor of Senate Joint Resolution 18, which the Texas Senate approved unanimously in March. Specifically, the bill would amend the state constitution to ... [One chart]

Wall Street raised no objections to a Ginnie Mae proposal to consolidate its two mortgage-backed securities programs, indicating the move would be good for securitization and result in other positives. However, there appeared to be no consensus among players on how to get there. Representatives of Ginnie Mae and the Securities Industry and Financial Markets Association met early this month to discuss the agency’s proposal. Analysts agreed it is far too early in the game to discern a clear path towards a single Ginnie Mae MBS program and that implementation is likely years away. Nevertheless, there were ...

Ginnie Mae servicers reported a small increase in servicing volume during the first three months of 2013, with Ocwen Loan Servicing posting the largest gains from last quarter and from a year ago. Servicers held a total of $1.33 trillion in government-backed mortgage debt outstanding at the end of the quarter, up a notch from the fourth quarter and 8.2 percent more than the total Ginnie Mae servicing debt a year ago. Though Ocwen was fifth in the ranking with $36.08 billion, its servicing volume was up more than 1000 percent both from the last quarter and from the same period last year. Among the top Ginnie servicers, only ... [One chart]

The prospect of legislation being offered that would grant the Department of Housing and Urban Development greater authority to manage the Home Equity Conversion Mortgage program has improved significantly after two House lawmakers declared their intention to introduce a bipartisan bill. Reps. Michael Fitzpatrick, R-PA, and Denny Heck, D-WA, announced during a recent hearing by the House Financial Services Subcommittee on Housing and Insurance that they will co-sponsor legislation to give the FHA the authority it needs to swiftly implement HECM reforms by mortgagee letter. Fitzpatrick expressed his support for ...

A top official of the Department of Housing and Urban Development said the agency is as concerned as Congress and the industry about mortgages seized through the power of eminent domain and will not refinance any mortgage taken in this manner. Testifying at a recent hearing before the House Financial Services Subcommittee on Housing and Insurance, Charles Coulter, deputy assistant secretary for housing, said FHA leadership is very much concerned about the idea of seizing troubled mortgages held in private-label securitizations under the power of ...

Two repurchase lawsuits in the New York state court involving allegedly defective mortgage-backed securities and the state’s six-year statute of limitations have resulted in different outcomes for defendants, one of which could potentially limit MBS putback claims in the Empire State. In a May 13 decision, Justice O. Peter Sherwood of the Commercial Division of the New York Supreme Court dismissed with prejudice a $259 million MBS putback lawsuit against Nomura Credit & Capital. The decision was significant in part because it was the first among dozens of MBS putback cases currently pending in NY state court that was dismissed with prejudice on grounds that the six-year statute of limitations has expired, according to defense attorneys. Two affiliates of hedge fund Fir Tree Partners filed...

Speculators have been driving up the price of Fannie Mae and Freddie Mac junior preferred stock, hoping that given the GSE’s rapidly improving fortunes they could make a killing down the road. One hedge fund official told Inside The GSEs that Fannie junior preferred shares that had an original face value of $50 are trading in the secondary market for $8 to $9 a unit. Stock originally priced at $25 can be had for $5 and change. Fannie common stock is now trading at $2.20 per share compared to a 52-week low of just 9 cents. Fannie and Freddie recently reported record quarterly profits of $63 billion, a large chunk of it tied to the recapture of deferred tax assets. But on a pure operating basis – minus the DTA – their combined earnings are in the range of $12 billion, which is almost $50 billion annualized.

Banks and thrifts continued to generate very strong earnings from their mortgage banking operations during the first quarter of 2013, despite a slowdown in originations and loan sales. Banks and thrifts reported a total of $7.704 billion in mortgage banking income during the first three months of 2013, according to a new Inside Mortgage Trends analysis of recently released call-report data. That was up 15.5 percent from the previous quarter, and the early 2013 earnings fell just ... [Includes one data chart]