Loan processing for incompetent veterans presents significant challenges to VA lenders, requiring strict compliance with special guidance on top of the basic VA underwriting rules. One challenge is dealing with legal appointees who assist and represent veterans in legal transactions, such as applying for a mortgage loan. There are ways to determine whether a veteran is incompetent, said Mark Jamison, loan production officer (LPO) with the VA Cleveland Regional Center, during the VA Lender Conference in Kansas City, MO, last month. The Department of Veterans Affairs or a probate court can deem a veteran incompetent due to severe injury, medical conditions, mental disorders, and financial instability, he said. A mortgage lender could make a determination of incompetency if the initial purchase contract documents were signed by an attorney-in-fact, the veteran divulged the incompetency, or the ...

Warehouse lenders ended the first quarter of 2017 with an estimated $59.0 billion of commitments on their books, a 4.8 percent sequential decline, according to exclusive survey figures compiled by Inside Mortgage Finance. Compared to a year ago, commitments were up 13.5 percent. However, many nonbanks sign commitment deals but don’t always draw on the lines very heavily. A case in point was the first quarter: the drop in commitments was benign compared to the overall decline in originations. Industrywide, residential lending fell by 33.6 percent from the fourth quarter. The good news for the warehouse sector is...[Includes one data table]

Publicly traded nonbank mortgage lenders and servicers reported weak earnings during the first quarter of 2017, according to an Inside Mortgage Trends summary. The nine nonbank lenders posted a combined profit of $116.69 million for the first three months of the year. That was down 79.4 percent from the fourth quarter, although it represented a huge improvement from the $509.68 million loss the group recorded in the first three months of 2016 ... [Includes one data chart]

Newfi Lending, an online residential mortgage lender, is looking forward to a big origination year with the consolidation of its product lines under the “Newfi Lending” brand. A multi-channel lender, the Emeryville, CA-based lender previously operated as Nexera Holdings under two national brands – Newfi for its consumer-direct retail business and Bluestream Lending for third-party originations. In conjunction with the change, Newfi’s wholesale-broker business will now be ...

As interest rates increase, nonbanks’ holdings of mortgage servicing rights will help offset losses tied to lower originations, according to analysts at S&P Global Ratings. “We expect market trends affecting nonbank mortgage companies to change dramatically now that rising interest rates are driving MSR valuations higher,” the rating service said in a recent report. Freddie Mac and the Mortgage Bankers Association separately forecast that the average interest rate ...

Transfers of servicing from large servicers to smaller firms can help improve loss mitigation performance while introducing new risks to the system, according to industry analysts. Smaller servicers tend to be more “nimble” than large servicers and are better suited to handle distressed mortgages, according to analysts at Moody’s Investors Service. The rating service published a report recently highlighting changes in the servicing industry. Many large servicers, predominantly banks, have reduced...

The Financial Services Roundtable recently called for enacting comprehensive housing finance reform, including reform of the FHA’s single-family mortgage insurance program while focusing the agency’s mission on first-time and low- and moderate-income borrowers. The FSR’s call came in a detailed response to President Trump’s executive order earlier this year directing the Treasury Department to conduct an assessment of financial regulations. For starters, the trade group urged...

Nonbank lenders far out-produced depository institutions in originating FHA mortgages during the first quarter of 2017. A new Inside FHA/VA Lending analysis reveals that nonbank lenders produced over 83 percent of FHA forward loans endorsed during the first quarter. With over 8,000 entities listed as originators and sponsors in FHA loan-level data, the overwhelming majority of them were independent mortgage banks, mortgage brokers and other nonbank lenders. The 14 largest FHA originators were all nonbanks, led by Quicken Loans, Freedom Mortgage and loanDepot. One sign of the overwhelming fragmentation in the FHA primary market is the fact that these three lenders accounted for just 11.3 percent of first-quarter endorsements. The largest depository originator of FHA loans was PrimeLending, an affiliate of PlainsCapital Bank. It ranked 15th in production with a ... [charts ]

What is an “egregious” VA mortgage loan? Panelists at last month’s VA Lending Conference in Kansas City, MO, helped shed light on such loans by describing them as flawed and in violation of VA requirements. “But there’s more,” said Greg Nelms, VA chief of loan policy. Unstable income and use of active-duty income when that income will be extinguished within one year could taint a VA loan and make it egregious, said Nelms. High debt-to-income ratio, residual income that is below VA requirements and failure to consider a spouse’s debts or credit in a community-property state also could have an adverse effect on a VA loan, he added. The panel presented several “egregious loan” scenarios involving reviews of several mortgages from 2016 in which lenders were required to sign indemnification agreements. The first example consisted of a VA home loan for $102,047, which closed in ...

The Department of Veterans Affairs’ interim final rule on qualified mortgages (QM) implements the Dodd-Frank provision requiring creditors to make a reasonable and good faith determination that the borrower has a reasonable ability to repay the loan. The VA interim final rule defines QM to mean any loan that the agency guarantees, insures or originates. However, certain limitations apply to VA’s Interest Rate Reduction Refinance Loans (IRRRLs) in the rule’s guidance for “safe harbor.” Under the safe harbor requirements for an IRRRL, the loan being refinanced must have been originated at least six months before the new loan’s closing, and six payments must have been made. In addition, the veteran should not have been more than 30 days past due during the six months preceding the new loan’s closing. The QM rule’s six-month seasoning requirement, however, inadvertently created an ...