Loss rates for notes sold in the Department of Housing and Urban Development’s distressed asset sales program are lower than those for notes that pass through the traditional conveyance claim process, according to HUD’s inspector general. An IG audit found that the DASP loss rate was more than 3 percentage points lower than the loss rate of similar conveyance notes. The IG took into account the losses for actual DASP sales and real estate-owned conveyance claims during the same audit period, the IG said. Ultimately, the DASP program saved the FHA insurance fund more money than the conveyance process, the report concluded. The FHA Office of Housing conducts mortgage loan sales under the Single Family Loan Sale Initiative, and most distressed notes are sold through DASP. The initiative aims to maximize recoveries to the ...

Correspondent-based mortgage production operations lost some ground in the conventional-conforming market during the second quarter of 2018 but made up some of it in an unlikely sector: jumbo originations. Jumbo production by correspondent lenders increased by a huge 63.7 percent from the first to the second quarter of 2018, according to a new Inside Mortgage Trends analysis. The data come from Inside Mortgage Finance surveys from lenders ... [Includes two data charts]

For nonbank servicers, “the future looks good,” according to S&P Global Ratings. Industry analysts note that nonbank servicers have improved their servicing practices and they could be helped by rising interest rates. While servicing volume among nonbanks boomed in the years after the financial crisis, S&P said the firms hadn’t made adequate adjustments to how borrowers are treated. “Many nonbanks previously exhibited, in our view, a more ‘consumer finance’ mentality to servicing ...

Stearns Lending this week rolled out a new partnership program to acquire equity stakes in independent retail mortgage banking franchises as it tries to broaden its origination base. Under the company’s “Preferred Partner Platform,” Stearns will offer its lending partners technology and operational support as well as capital markets assistance, said company CEO David Schneider. Participating lenders are able to maintain their brand identity, management and culture. The first acquisition was ...

The Rural Housing Service of the U.S. Department of Agriculture has proposed changes to its single-family housing guaranteed loan program to help certain lenders navigate the loss-claim process. Specifically, the RHS proposes to streamline the loss-claim process for lenders that have acquired title to property through voluntary liquidation or foreclosure. Under current rules, when a lender acquires title to a real estate-owned property, the RHS requires the lender to submit a plan to maintain and market the property. Any change to the plan must be approved by RHS. RHS also provides the lender two opportunities to file a loss claim on an REO property: When the property sells during the permissible marketing period, or after the period (typically from nine to 12 months) if the REO property does not sell. The agency proposes to make changes to the loss-claim payment process when a lender acquires ...

Big Four accounting firm Deloitte has paid $149.5 million to the federal government to settle allegations of misconduct in connection with its role as the independent outside auditor of defunct FHA lender Taylor, Bean & Whitaker. The settlement amount includes $115 million in restitution paid to the Department of Housing and Urban Development on Aug. 13, 2018, according to the HUD inspector general. The rest of the payment went to the Department of Justice, which brought the charges on behalf of the government. Deloitte admitted neither to any liability nor to wrongdoing. TBW was an FHA direct endorsement lender and a Ginnie Mae-approved mortgage-backed securities issuer and servicer. It originated, underwrote, acquired and sold mortgages to Freddie Mac and other investors, which used the loans to support MBS issuance or held them as investments. In its heyday, TBW was one of the ...

The profitability of mortgage servicing is under pressure these days due to factors that keep costs high, but there is a better way to reduce costs and conveyance time, especially for FHA foreclosed loans, according to a white paper from Dimont. Integrated processing of insurance claims and conveyance-related activities can dramatically reduce servicers’ operating costs and penalty risks on FHA and other investor-backed loans, said the Dallas-based technology solution provider. The white paper, “The Power of Integrated Claims & Conveyance Services,” lists factors that could significantly affect a servicer’s profitability, such as low origination volume, declining delinquency rates and other factors, like severe weather patterns. Servicing costs for performing loans peaked in 2015 when the average cost for servicing a single-family loan reached $181 per loan – the highest cost since the ...

Ginnie Mae issuers produced $36.68 billion of new single-family mortgage-backed securities last month, a modest 5.0 percent gain from July, according to a new Inside FHA/VA Lending analysis and ranking. Through the first eight months of the year, Ginnie issuance was down 11.0 percent from the same period in 2017. The MBS figures do not include FHA home-equity conversion mortgages, and loan amounts are truncated to the lowest $1,000. Purchase mortgages accounted for 75.6 percent of new issuance in August, although volume was up just 1.9 percent from July’s level. On a year-to-date basis, the purchase-mortgage share rose from 65.7 percent in 2017 to 70.0 percent for the first eight months of this year. Total volume, however, was down 5.1 percent. The refinance market has been more wobbly. As of the end of August, refi volume totaled $65.87 billion, down 26.2 percent from the ... [Chart]

Home Equity Conversion Mortgage originations fell dramatically in the second quarter, raising the possibility of a long reverse-mortgage winter in 2018, according to an Inside FHA/VA Lending analysis of HECM data. HECM production fell a whopping 40.9 percent in the second quarter from the previous period. Total HECM originations stood at $8.6 billion by the six-month mark, down 8.3 percent from the prior year. Traditional HECMs, which exclude purchases and refinances, accounted for 80.5 percent of FHA-insured reverse mortgages originated during the first half of 2018. The amount of funds available at loan origination for the first six months totaled $4.7 billion. Analysts blame the low HECM originations on the new lower Principal Limit Factors (PLFs) for HECMs, which became effective in FY 2018. Under the HECM final rule issued last year by the Department of Housing and Urban Development, principal limits [Chart]

Rising interest rates continue to benefit the Federal Home Loan Banks whose net income was up by more than 10 percent for the first half of the year, according to a report released this week by Moody’s Investors Service. FHLBank net income was $1.83 billion in the first six months of 2018, up from the $1.67 billion a year earlier. This reflected a 10.45 percent increase that was driven by growth in net interest income, partially offset by lower non-interest income. Moody’s noted that yields on both advances and liabilities increased because of higher interest rates. Overall, the net interest margin improved nine basis points to 0.47 percent from the same period in 2017.