An announced 10 basis-point hike in the FHA mortgage insurance premium (MIP) may bolster the health of the FHA Mutual Mortgage Insurance Fund and speed up shrinkage of FHA market share, but it will also make FHA-insured loans costlier for borrowers. The increase is the latest in a series of premium hikes imposed by the Department of Housing and Urban Development in the past three years to strengthen the MMI Fund’s capital reserves, which lately have fallen to a negative position. Simultaneously, HUD announced other measures to ... [1 chart]

The FHA this week has proposed to set a 95 percent maximum loan-to-value ratio for FHA-insured loans over $625,500, effectively raising the minimum downpayment for jumbo loans from 3.5 percent to 5 percent. In a Feb. 6 Federal Register notice, the FHA said the proposed change is aimed at improving the health of the Mutual Mortgage Insurance Fund, whose statutory capital reserve ratio has fallen to a precarious level, raising the specter of a taxpayer bailout. Despite steps taken since 2009 to strengthen the MMIF, actuarial reviews of the fund have projected rising levels ...

Although unhappy about the demise of the popular, fixed-rate, standard Home Equity Conversion Mortgage, loan officers are not worried about any long-term adverse effect on their FHA businesses. In fact, members of the National Reverse Mortgage Lenders Association, support the FHA’s decision, which is a part of a broad effort to strengthen and better manage the risk of the agency’s Mutual Mortgage Insurance Fund. They said they have other HECM products to offer in lieu of the standard HECM loan. Beginning April 1, borrowers who choose a fixed interest rate will be limited to ...

A federal appeals court has rebuffed the bid by American International Group’s mortgage insurance unit to overturn a lower court’s order to pay more than $45 million to SunTrust Banks for insured losses related to mortgage defaults. The Fourth Circuit Court of Appeals last week upheld a Virginia federal judge’s ruling that AIG’s United Guaranty breached an insurance agreement by refusing to pay claims on 1,305 defaulted “combo” loans – which is a first-lien loan with a smaller, second-lien “piggyback” loan. At issue were mortgage defaults that SunTrust claimed should have been covered under a ...

Genworth Financial Inc.’s U.S. mortgage insurance segment continued to be a burden to its parent despite reporting a narrower operating loss of $34 million in the fourth quarter of 2012, compared to losses of $38 million in the prior quarter and $96 million in the prior year. Nonetheless, the reduced amount of losses during the period was good news to company executives who reported net income of $166 million, or 34 cents a share, during the period from $142 million, or 29 cents, a year earlier. Operating profit was $167 million, or 34 cents a share, up from ...

California and Texas took the honors for top FHA producers among states and other U.S. jurisdictions in 2012, with a combined $59.2 billion in new mortgage loans insured by the FHA. The combined output of the two states represented 25.5 percent of the $232.1 billion in new FHA originations reported by all 50 states, Puerto Rico, Guam, the U.S. Virgin Islands and the District of Columbia for the entire year. Total FHA production by state was up a modest 5.2 percent in the fourth quarter from the previous quarter and a hefty 21.9 percent from the prior year. California, which accounts for 25 percent of the U.S. housing market, reported ...

Mortgage lenders large and small continued to report strong earnings on their mortgage banking operations during the fourth quarter of 2012, but the year that likely will go down as the most profitable in the industry’s history ended on a downslope. A new Inside Mortgage Trends analysis of year-end earnings reports from 23 lenders reveals a staggering combined earnings of $32.74 billion for the full year of 2012. The same group posted an aggregate net income of $5.35 billion, a total ... [Includes one data chart]

There is reason to believe the mortgage banking industry’s record level of profitability may have peaked, as gain-on-sale margins have already begun to slip and more dark clouds appear on the horizon. “Mortgage banks have enjoyed record high gain-on-sale margins over the past several quarters,” analysts at Compass Point Research and Trading noted in a recent market review. They attributed this trend mostly to two primary factors: limited capacity in the mortgage market to handle increased demand and ...

Outside investors poking around the mortgage banking industry for a possible franchise deal first and foremost want the companies they’re courting to have Ginnie Mae approvals. “If you have the Ginnie eagle, it’s golden,” said Chuck Klein, managing director for mergers and acquisitions for Mortgage Banking Solutions. “Retained Ginnie servicing is what it’s all about.” Klein, of course, isn’t...

The Department of Housing and Urban Development has sweetened the pot to encourage more investors to participate in an FHA program for disposing of real estate-owned properties to ease HUD’s housing inventory. HUD announced it is raising the discount for REO properties under its First Look Sales Method to 15 percent from 10 percent. Properties include those that do not meet the standards for FHA insurance. The special program was launched in 2010 to give preference to eligible purchasers under the Neighborhood Stabilization Program (NSP) to ...