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 ...

The number of VA loans with a deficiency fell in April from March but was up 71.7 percent from the same period a year ago, according to the VA Lender Report Card. The report card includes VA loan reviews and deficiencies by month from April 2014 through April 2015. VA loan originations over the one-year period totaled 563,967, the report showed. Of those loans, 303,149 were purchase loans, 162,447 were streamlined refinances, and 98,371 were cash-out refis. A total of 39,037 loans were reviewed by VA, which comprised about 7.0 percent of total volume. Altogether, 14,793 loans (37.9 percent) had deficiencies. The average deficiency response time was 28.1 days. Of the 1,726 loans the VA examined in April, 613 (35.5 percent) contained deficiencies, down from 1,234 loans (33.7 percent of 3,662 loans reviewed) that were found with flaws in March. The number of deficient loans found in ...

A VA mortgage servicer must immediately schedule an inspection and protect a property securing a VA loan if the property has been left vacant or abandoned by its owners. According to new guidelines issued by the VA, loan servicers must conduct an inspection immediately after becoming aware that the property’s physical condition may be in jeopardy. If local codes require more extensive protection than what VA requires, servicers should adhere to local requirements, the agency said. Failure to protect and preserve the collateral may result in a reduced guaranty claim if the servicer’s failure increased the VA’s liability on the loan. Unless the loan is undergoing loss mitigation, a property inspection is also required before the 60th day of delinquency or before starting foreclosure, whichever is earlier, the VA said. In addition, a property inspection will be required at least once a month after ...

The Department of Housing and Urban Development’s Inspector General has slammed Ginnie Mae for understating the severity of misstatements in prior year financials. In a memorandum, the HUD IG said Ginnie Mae’s inadequate disclosures in a restatement notification did not help users of financial statements understand the full impact of the material misstatements. The reporting errors were identified in an IG audit of Ginnie’s fiscal year 2014 financial statements. According to the IG, the misstatements in the 2014 audit were due to improper accounting for FHA’s reimbursable costs and the flawed accounting treatment and inadequate disclosure of borrowers’ mortgage escrow funds held in trust by Ginnie in its defaulted issuers’ portfolio. These errors may have affected Ginnie Mae’s prior year financial statements as far back as FY 2011, the IG concluded. In its audit report, the IG ...

Given the fairly wide range in origination volume trends among the group, it’s difficult to forecast how the overall market fared based on just their activity.

Five large commercial banks reported a combined 7.1 percent decline in mortgage originations during the third quarter of 2015, accompanied by an even bigger drop in mortgage-banking income, according to an Inside Mortgage Finance analysis of earnings releases. Two of the five – JPMorgan Chase and U.S. Bank – reported slight increases in mortgage production from the second quarter. Given the fairly wide range in origination volume trends among the group, it’s difficult to forecast how the overall market fared based on their activity. At the midway point in 2015, these five banks accounted for 26.8 percent of total first-lien mortgage originations. Wells Fargo remained...[Includes one data table]

In the past year and a half, banks have started holding an increasing share of conventional conforming mortgages in portfolio instead of securitizing them through the government-sponsored enterprises. Industry analysts suggest GSE guaranty fees are the reason. In the first half of 2015, 91.6 percent of the estimated $442 billion in originations of conventional conforming mortgages were included in mortgage-backed securities. In 2013, 97.0 percent of the estimated $1.17 trillion in conventional conforming originations were securitized, according to an Inside Mortgage Finance analysis. “Securitizing conforming mortgages in agency MBS has become...