Overall, 2014 was not a good year for FHA originations as tight underwriting and high loan costs narrowed the band of borrowers able to qualify for an FHA-insured residential loan, according to an Inside FHA Lending analysis of agency data. FHA total endorsements dropped to $35.2 billion, an 8.1 percent drop in the fourth quarter from the previous quarter, with fixed-rate and adjustable-rate mortgages declining by 7.9 percent and 12.7 percent, respectively. FHA purchase originations suffered a decline of 11.3 percent. There was one bright spot: FHA refinances rose a meager 2.2 percent while the percentage of conventional loans that refinanced into FHA saw a more substantial lift of 13.0 percent quarter to quarter. FHA baseline lending (below $417,000) saw volume drop 8.4 percent in the fourth quarter. FHA jumbo loan amounts up to the statutory high-cost loan limit and ... [ 2 charts ]

The FHA has updated the contents of a notice to delinquent borrowers regarding the availability of approved housing counseling and provided a new template for lenders to explain, in simple terms, the benefits of housing counseling. The latest guidance, Revised Notification to Homeowners of Availability of Housing Counseling Services (Mortgagee Letter 2015-04), also provides a description of counseling services to delinquent borrowers. The revised requirements supplement those outlined in previous mortgagee letters and certain provisions in the HUD handbook. Lenders must comply with the new requirements by April 4, 2015. FHA lenders must provide delinquent borrowers with a notice about the availability of housing counseling by an approved provider and the principal mortgage lender. However, there is no standard language for such notices Hence, the FHA has ...

Although depository institutions continued to account for the lion’s share of the mortgage servicing market, nonbank servicers continued to gain ground in late 2014, according to a new market analysis and ranking by Inside Mortgage Finance. Banks, thrifts and credit unions accounted for 71.8 percent of the $7.351 trillion of home mortgages serviced by the 50 largest players in the market as of the end of last year. Nonbank servicers accounted for 28.2 percent of the group total, up from 25.9 percent at the end of 2013. That’s...[Includes two data charts]

Regional banks are reporting significant declines in mortgage-banking income during the fourth quarter, although nearly all institutions continue to earn a profit from the business. A diverse group of 20 regional banks posted a combined $684.2 million in mortgage-banking income for the fourth quarter of 2014, according to a new Inside Mortgage Trends analysis of earnings reports. That was down 13.5 percent from the group’s aggregate $790.5 million in ...

The stars appear to be aligning for a wave of refinance activity in the first quarter, which is expected to boost the revenues and results for U.S. mortgage companies during the period, according to an analyst at Keefe Bruyette & Woods. Can it last? “With the 10-year [Treasury] now below 2 percent, the average effective conforming rate is below 4 percent,” analyst Bose George said during a recent KBW podcast. “That rate should continue to trend down as long as ...

The majority of mortgage lenders are forging ahead in 2015 to grow their origination and servicing businesses notwithstanding concerns about compliance and weak consumer demand, according to Fannie Mae’s fourth quarter 2014 survey of senior mortgage executives. The survey found that 88 percent of executives aim to grow their loan origination business by increasing the number of retail branches and loan officers and expanding their ...

Not only have nonbank lenders steadily increased their production market share the past two years, but their loan officers, in general, earn more money on a per unit basis than their depository counterparts. At least that was the finding of several interviews conducted by Inside Mortgage Finance during January. “Banks are tiered 50 to 100 basis points [per loan] with qualifiers,” said Paul Hindman, managing director of business development for Grid Financial. “Nonbanks are tiered 75 to 175 basis points with qualifiers.” And LOs who work for net branch operators can earn...

Cove Financial, a lender that offered a unique rent-to-own program, went out of business at the end of 2014. The company recently notified loan originators offering its Mortgage Alternative Program that Cove “is no longer conducting business or offering MAP.” Officials said vendors and others that have partnered with the company will be contacted by an assignee for the benefit of creditors. The lender added that the closure doesn’t impact borrowers ...

FHA lenders are gearing up to meet an anticipated increase in demand for purchase and refinance loans with mortgage rates falling to near-historic lows coupled by a 50 basis point cut in FHA’s annual insurance premium. Lenders hope the combination of lower mortgage rates and the revised FHA pricing structure will create sufficient incentive for more borrowers to purchase a home or refinance an existing mortgage. For example, Freedom Mortgage, 32nd in Inside FHA Lending’s 2014 ranking of FHA lenders, is looking to hire as many as 500 new employees to handle the anticipated surge following the FHA action. Stanley Middleman, chief executive officer of Freedom Mortgage, expects a robust FHA refinance market during the first half of 2015, tapering off in the second half. “Lower rates, coupled with premium reduction, put a lot of FHA borrowers in a position to get their ...

The half-percent annual premium reduction the FHA announced recently will likely enable the agency to reclaim the high loan-to-value segment of the mortgage market from Fannie Mae and Freddie Mac, according to analysts. Speaking with some originators that have been looking at the best way to securitize high LTV loans, Deustche Bank securities analysts said the lower FHA annual premium would put pressure on the government-sponsored enterprises to lower the cost of their guarantees. “The grapevine has anticipated for months that [g-fees] have little chance of going up and more chance of going down,” the analysts said. “But the specific risk triggered by the FHA move is that the cost of credit will now drop for high-LTV conventional borrowers.” Even before the FHA policy shift, private mortgage insurers have been pressuring the Federal Housing Finance Agency to ...