More than half of FHA-insured loans analyzed for material defects have been mitigated over a 12-month period, according to the Department of Housing and Urban Development’s latest quarterly loan-review analysis. Approximately 31,396 loans were analyzed over four quarters for possible defects, beginning in the third quarter of 2017 and ending the second quarter of 2018. Approximately 59.8 percent of the reviewed loans were initially deemed unacceptable. HUD data showed that most, 54.1 percent, of the loans reviewed have been successfully mitigated. The report provides a quarter-by-quarter snapshot of the FHA’s Loan Review System results. Net defects represent outcomes after lenders have implemented methods and techniques to mitigate or remediate the initial findings. Of the reviewed loans, 24.7 percent were conforming while 15.5 percent were found to be deficient. About 0.2 percent of loans were ...

The U.S. District Court for the Southern District of Iowa earlier this month granted preliminary approval of an $11.2 million settlement in a proposed class-action against national bank JPMorgan Chase. According to the complaint filed in 2016, Chase charged and collected interest on FHA-insured loans that paid off early. Chase was either the lender or the servicer of the loans. The lawsuit, Audino et al. v. JPMorgan Chase Bank, alleges that the bank breached the promissory notes underlying the class’s FHA-insured home loans when it collected post-payment interest without providing disclosures to borrowers who made a prepayment inquiry, request for payoff figures, or tender of prepayment. Plaintiffs allege that the bank did not use the proper FHA form to provide the disclosures to consumers. Chase denies any wrongdoing and neither admits nor concedes any actual or potential fault or liability. The bank also denies it was ...

Fannie Mae and Freddie Mac in a few days are expected to report second-quarter results that likely will top earnings of the prior period when they posted a combined net profit of $6.5 billion, according to an analysis by Inside MBS & ABS.

In a potentially significant shift, Wells Fargo has set aside $507.0 million in mortgages for inclusion in a non-agency mortgage-backed security. Wells is the top jumbo lender and some industry analysts suggest that the jumbo MBS market won’t rebound until banks like Wells stop retaining production in portfolio. Wells said loans designated as held-for-sale for a future MBS are nonconforming mortgages that would have otherwise been stored in its portfolio. Although no other details about ...

Both FHA and VA saw measurable declines in the number of seriously delinquent loans during the second quarter, although early-stage default rates were up slightly. A new Inside FHA/VA Lending analysis of Ginnie Mae mortgage-backed securities data found timely payments being made for 93.6 percent of FHA loans and 96.7 percent of VA loans at the end of June. Those numbers were off slightly from the first quarter, when seasonal factors typically lead to the lowest delinquency rates of the year. The increase in late payments was concentrated in loans that were one or two months overdue. There were 419,366 FHA and VA loans in this category at the end of June, up 13.5 percent from the end of March. They represented 4.13 percent of total FHA and VA loans in Ginnie MBS. FHA delinquency rates were substantially higher than those in the VA program, and the number of early-stage delinquencies ... [Charts]

Nonbank online lenders, especially smaller ones, are concerned about the high cost of originating a loan. In a new study published by the Deloitte Center for Financial Services and Lendit Fintech, 77 percent of the nonbank respondents said the cost of funding is among their top three concerns. Thirty-eight percent listed it as their first concern. Deloitte noted the nonbank fintech market landscape is made up of a few large players and many small ones. In fact, the majority of survey participants ...

The sale of bulk mortgage servicing portfolios stayed red hot in the second quarter, with buyer interest and prices remaining high, but a modest lull in activity may be on the way, according to interviews conducted this week by Inside Mortgage Trends. Servicing brokers polled by this newsletter said there’s roughly $28 billion worth of receivables currently in the market that are ready to change hands. This includes a roughly $10 billion package of servicing rights that has been ...

With mortgage production costs exceptionally high, a number of lenders are outsourcing certain functions. Christopher George, president and CEO of CMG Financial, said the lender moved some operations offshore via outsourcing. “There are some areas where we can do business substantially cheaper and not compromise quality,” he said this week at the California Mortgage Bankers Association’s secondary market conference. George said two years ago, CMG had 161 ...

The Department of Housing and Urban Development has issued an interpretive rule to clear up some of the confusion created by the recently approved Dodd-Frank reform act regarding the eligibility of certain VA refinance loans to serve as Ginnie Mae collateral. Although interpretive rules are exempted from public comment under the Administrative Procedures Act, HUD is seeking public input on its interpretation of the loan-seasoning provision of the Economic Growth, Regulatory Relief, and Consumer Protection Act, which President Trump signed into law on May 24, 2018. Among other things, the statute prohibits Ginnie from guaranteeing payment on a security backed by a mortgage that does not meet its seasoning requirements. The protective measure was designed to deter lenders from encouraging veterans to refinance their loans often and repeatedly. Loan churning led to faster prepayment speeds on the ...

The mortgage industry this week continued to look for ways to resolve the VA streamline refi loan mess, which arose from the implementation of statutory seasoning requirements under the Dodd-Frank reform act, even as Ginnie Mae pointed to Congress to come up with a solution. At issue is approximately $500 million worth of “orphaned” VA Interest Rate Reduction Refinance Loans that are now ineligible for Ginnie Mae securitization. The Mortgage Bankers Association is asking Congress for a legislative fix but is also looking for other forms of relief. Pete Mills, MBA’s senior vice president of residential policy and member management, is trying to drum up investor interest in the orphan loans, which, for now, appear destined for the secondary “scratch and dent” market. More buyers could potentially generate higher bids for the loans and lower losses for nonbanks that could not deliver them ...