Unless contravened by another federal or state statute or jurisdiction, FHA lenders must use the agency’s adjusted fair market value (AFMV) for all foreclosure sales and post-foreclosure sales associated with defaulted FHA loans, according to the FHA. The FHA said it issued guidance because more lenders are using FHA procedures regarding claims without conveyance of title. Before applying the AFMV, lenders must ensure that th loan’s FHA insurance is still active and that the loan is not subject to indemnification. Both items may be verified by checking Neighborhood Watch. Working with the borrower, the lender must make sure that all possible applicable home-retention and loss-mitigation options have been considered and explored before moving to an AFMV alternative. In addition, the lender must determine that the borrower’s case does not meet the criteria for a pre-foreclosure sale or deed-in-lieu of foreclosure. Mortgagees may not proceed with any foreclosure sale until ...

Final PMIERS Rule Expected in 1Q15. The Federal Housing Finance Agency has revised its timeline for publishing a final version of the Private Mortgage Insurance Eligibility Requirements, which Fannie Mae and Freddie Mac proposed in July at the direction of the FHFA. The PMIERS will establish capital and other requirements for private mortgage insurers. In a statement, industry trade group U.S. Mortgage Insurers said it has received word from the agency that the final PMIERS would not be published until at least late in the first quarter of 2015. The FHFA initially indicated that a final rule would be issued by yearend 2014. The USMI reiterated its support for an updated PMIERS. Mortgage Executives Concerned About G-Fee Increase. A survey of mortgage executives at this year’s Mortgage Bankers Association annual conference found 53 percent saying that ...

Fewer than 100 financial institutions could be adversely affected by a proposed Federal Housing Finance Agency rule to tweak membership criteria for the 12 Federal Home Loan Banks, the agency’s head told the Senate Banking, Housing and Urban Affairs Committee last week. In his first oversight hearing appearance since assuming office in January, FHFA Director Mel Watt said the agency’s “preliminary review” has found of the 7,500 FHLBank member institutions less than 100 may potentially be negatively impacted.

A sharp drop in net income from servicing operations during the third quarter was the key factor in a decline in overall mortgage-banking profitability for a group of major lenders, according to a new analysis by Inside Mortgage Trends. The 11 publicly traded companies, which include most of the top originators and servicers in the industry, reported a combined $1.25 billion in net income from servicing, including the gains or losses from hedging their mortgage servicing rights. That was down 43.8 percent from the second quarter and was the lowest net income from servicing for the group since the third quarter of last year.Two of the companies reported increased servicing revenue. At Huntington Bank, net servicing income nearly tripled ...

Understanding the ebb and flow of mortgage debt is hampered by a lack of data on mortgage flows, making it more difficult for policymakers and regulators to deal with fluctuations in overall credit growth. A working paper published recently by the Federal Reserve attempts to make sense of the factors driving the volatility in the stock debt by analyzing changes in aggregate mortgage debt into mortgage inflows and outflows. It attributes these inflows and outflows to more micro-components such as investor activity, first-time homebuying and borrower credit score. “Quantifying these various flows into and out of the pool of mortgage debt allows for a precise assessment of the relative importance over time,” the paper noted. “Creating such data on an ...

Commercial banks and thrifts reported a combined $4.67 billion in mortgage-banking income during the third quarter of 2014, according to a new Inside Mortgage Trends analysis of call-report data. Third-quarter results were down 4.9 percent from the second quarter, which is consistent with the figures reported by publicly held mortgage lenders. Year-to-date mortgage-banking income for the depository institutions was $12.96 billion, down 37.0 percent from the first nine months of last year. Wells Fargo and JPMorgan Chase continued to rank as the top two banks in mortgage-banking income, but both reported declines of more than 25 percent from the second quarter to the third. On a year-to-date basis, the two lenders accounted for 47.3 percent of total mortgage-banking income earned ...

FHA Mutual Mortgage Insurance Fund ended fiscal 2014 in the black but was still far short of its statutory reserve requirement, prompting critics in Congress to renew their cries for FHA reform. An independent actuarial report sent to Congress this week showed that the MMI Fund now stands at $4.8 billion after a gain of nearly $6 billion over the last year. For the first time since 2009, the fund’s capital ratio also crossed into positive territory at 0.41 percent, up 52 basis points from the negative 0.11 percent posted in fiscal 2013. Overall, the economic value of the fund has risen by $21 billion over the last two years because of the aggressive steps the agency took to stabilize and strengthen the fund, the report said. Policy changes led to improved underwriting for single-family mortgages, increased mortgage insurance premiums, stronger loss mitigation policies and higher recoveries, it added. In addition, with ...

The economic value of the FHA’s Home Equity Conversion Mortgage legacy portfolio fell to negative $0.9 billion in fiscal 2014 due mainly to volatility in long-term house prices and interest rates, according to the latest independent actuarial report on the health of the Mutual Mortgage Insurance Fund. The latest result was a significant improvement from FY 2012, when the fund stood at negative $2.8 billion. In fiscal 2013, the HECM portfolio’s economic value of positive $6.5 billion appeared to be a whopping change from the previous year but that amount reflected a $4.6 billion cash infusion from the forward program and from the $1.7 billion mandatory appropriation, the report clarified. The report also showed a corresponding decline in the HECM capital ratio to negative 1.20 percent. Actuarial projections for fiscal 2015 place the HECM portfolio’s economic value at negative $1.1 billion. The fund’s capital resources for ...

Wells Fargo and the Department of Justice are reportedly at an impasse in their settlement talks in connection with a lawsuit accusing the bank of improper underwriting and false certification of certain FHA-insured loans. In an e-mailed statement to Inside FHA Lending, a bank spokesperson said Wells Fargo’s good faith effort to work with the federal government to resolve the complaint “has not yet resulted in a settlement.” Nonetheless, the bank “will move forward with presenting [its] case in support of [its] prudent and responsible FHA lending practices, which have produced high-quality FHA loans with delinquency rates that are half the industry average,” the spokesperson added. This week, citing an unidentified source, Bloomberg reported that lawyers for the government and the bank have told the presiding judge in the case that they ...

Thousands of military veterans in high-cost areas may be deprived of VA’s home-loan guarantee benefits unless Congress extends the current VA loan limits before the end of the year. Those loan limits expire on Dec. 31, 2014. The VA loan limits are based on median home values estimated by the FHA, providing loans up to 125 percent of local area median price. The program does not set a cap on how much a veteran can borrow to finance a home purchase but it does limit the maximum amount it can guarantee to 25 percent of the current loan limit. Veteran and industry groups are urging Congress to make the VA limits permanent. A VA spokesperson said the agency was not asked for a position on the issue since Congress did not put forward any bill in any of the hearings this year. “But as a general rule, VA wants to maximize the opportunities ...