The use of conventional conforming mortgages in the home purchase market, which fell to the lowest level in more than a decade last year, is staging a comeback in 2012. A combination of events – particularly increased home buying by higher-income current homeowners and more attractive pricing for higher loan-to-value ratio conventional financing – appears to be fueling the growth. Perhaps the most visible sign of the growth in the conventional side of the home purchase market can be found in Fannie Mae’s and Freddie Mac’s latest mortgage activity numbers. According to data compiled by Inside Mortgage Finance, the combined home purchase mortgage business of Fannie and Freddie climbed to $77.6 billion in the third quarter of this year. That was not only up 33.6 percent from the second quarter’s volume, but put...

VA Home Loan Program Celebrates 20-Millionth Loan Beneficiary. The Department of Veterans Affairs this week commemorated the 20-millionth recipient of a VA loan under the agency’s Home Loan Guaranty Program. Agency officials held a ceremony at the Woodbridge, VA, home of the loan’s recipient, Mrs. Elizabeth Carpenter, whose husband, Capt. Matthew Carpenter, passed away in 2010. Since 1944 as part of the original GI Bill of Rights, the VA has been providing guarantees to 30-year mortgage loans with low interest rates and has guaranteed ...

A nonsupervised Arizona FHA lender whose high default and claims rate triggered a supervisory audit earlier found itself in a deeper mess for improper underwriting on a number of FHA streamline refinanced loans that resulted in losses to the FHA insurance fund. The Department of Housing and Urban Development’s Inspector General found that Allen Mortgage of Centennial Park, AZ, violated HUD’s regulations , procedures, and instructions in the underwriting of FHA-insured loans. Specifically, of the 73 streamlined refinance mortgage loans reviewed by the IG, 23 were ...

New pool level data issued by Ginnie Mae reveal a rising share of FHA-insured loans that have refinanced with grandfathered mortgage insurance premiums (MIP) in new Ginnie Mae mortgage-backed securities issuances, according to analysts. Of particular interest to investors is the share of borrowers with existing FHA-insured home loans who took advantage of an opportunity to refinance on advantageous terms under the FHA Streamline Refinance program, said analysts at Bank of America Merrill Lynch. Under the revised rules of the FHA Streamline Refi program, FHA-insured mortgages endorsed before June 1, 2009, were ...

FHA loan originations, driven largely by streamline refinancing, increased 5.3 percent to $60.9 billion in the third quarter of this year, the highest level it has been in almost two years, according to Inside FHA Lending’s latest analysis of FHA data. The third-quarter volume reflected an upward trend that began in the first quarter with nearly $48.5 billion in total FHA single-family production and which later rose to $57.8 billion in the second quarter. The last highest point in FHA production was in the fourth quarter of 2010 when ... (2 charts)

The federal government this week filed a lawsuit against Bank of America regarding stated income mortgages originated by Countrywide Financial’s former subprime unit and sold to the government-sponsored enterprises in 2007 through 2009. The lawsuit is the first of its kind, though some legal analysts question the strength of the claims. U.S. v. BofA was filed by the U.S. Attorney for the Southern District of New York, the Inspector General of the Federal Housing Finance Agency and the Special Inspector General ...

Republicans in the House will approve a package of legislation to reform the government-sponsored enterprises next year, according to the chief of staff for Rep. David Schweikert, R-AZ. The Arizona lawmaker is also working on a bipartisan bill to establish a framework for the non-agency mortgage-backed security market. Speaking at the ABS East conference sponsored by Information Management Network this week in Miami, Matthew Tully, chief of staff for Schweikert, said GSE reform is a top agenda item for House ...

Rep. David Schweikert, R-AZ, said this week that in the coming months he will introduce bipartisan legislation to establish a regulatory framework for prime non-agency MBS. “I’ve spent the last two years trying to figure out what the box will look like,” he said. Non-agency MBS participants continue to debate whether reform of the government-sponsored enterprises is necessary before the non-agency MBS market can return in a meaningful manner. At the ABS East conference sponsored by Information Management Network this week in Miami, Schweikert said a functioning non-agency MBS market is necessary before members of Congress can be convinced to move forward with GSE reform. “I need to have...

Investors are still a major hurdle for industry efforts to put Fannie Mae and Freddie Mac MBS on a more level playing field, while Ginnie Mae is beginning to weigh its options to address a major shift in the profile of its MBS business. Freddie’s share of new MBS production by the two government-sponsored enterprises has dropped significantly over the past few years. The company typically accounted for 42 percent to 45 percent of GSE issuance up until 2008, when it fell to 39.8 percent. Last year, Freddie captured just 35.4 percent of the GSE market, and in the first nine months of 2012 it’s down to 34.2 percent. Steven Abrahams, a managing director at Deutsche Bank, said...

Recent efforts by the government-sponsored enterprises and the Federal Housing Finance Agency to offer clarity and consistency about repurchase demands may or may not bear fruit as neither agency officials nor industry observers can speak confidently as to its ultimate effectiveness. According to participants at an Inside Mortgage Finance webinar this week, the GSE representation and warranty framework unveiled by the FHFA last month and the GSEs’ new quality control guidelines announced last week are steps in the right direction but there are a lot of moving parts to take into account. “We tried the best we could to address...