Reinstating the government-sponsored enterprises’ conventional 97 percent loan-to-value mortgage programs would benefit first-time homebuyers and borrowers with little or no cash reserves for a downpayment but adversely affect the FHA Mutual Mortgage Insurance Fund, according to analysts. If limited to first-time homebuyers, a conventional 97 LTV loan would offer some new homeowners better home loan financing than FHA and provide greater access to mortgage credit, said analysts with Bank of America Merrill Lynch. For years, Fannie Mae offered conventional 97 LTV loans through its MyCommmunityMortgage to help first-time homebuyers purchase a home with only a 3 percent downpayment. It was a better alternative to FHA’s main product, which required a 3.5 percent downpayment. The Fannie product also had less ...

The Federal Housing Finance Agency may end up having second thoughts about its proposed housing goals for Fannie Mae and Freddie Mac given the room for improvement industry members cited in comment letters to the agency. Issued by the FHFA in September, the proposal would increase some of the benchmark levels for Fannie’s and Freddie’s affordable housing goals through 2017, while also establishing new housing subgoals for low-income multifamily properties.

The Mortgage Bankers Association has formally called upon the Federal Housing Finance Agency’s official watchdog to reconsider some of its proposals meant to prevent the next multi-billion dollar fraud scheme against Fannie Mae and Freddie Mac. In a letter dispatched to the FHFA’s Inspector General late last week, the MBA cited its opposition to certain recommendations the IG made to the Finance Agency in its August post-mortem on the swindle perpetrated by the now-defunct Taylor, Bean & Whitaker Mortgage.

FHFA’s Watt Promises a CEO for the CSP by Year-end. After a year of searching for a chief executive to lead Common Securitization Solutions, the Federal Housing Finance Agency is getting closer to picking a candidate for the job. Speaking at the annual convention of the Mortgage Bankers Association in Las Vegas last week, FHFA Director Mel Watt promised the industry that a CEO would be named by Dec. 31. The FHFA’s search firm is Spencer Stuart.

Late this week, Ocwen Financial Corp. announced that it has set aside $100 million for a possible regulatory settlement with the New York Department of Financial Services, a move that couldn’t come too soon for the troubled “high-touch” servicer. But the company also cautioned that a settlement with the NYDFS is hardly a sure thing. More-over, some Ocwen watchers believe a deal with New York could spur other state regulators to take action against the company. One consultant who has done work for Ocwen told...

While the FHA’s share of the primary insurance market has dropped significantly since premiums were hiked in early 2013, the VA program and the rural housing loan program run by the Department of Agriculture are going strong, according to agency officials. During a panel discussion at the Mortgage Bankers Association annual convention this week, VA and Rural Development executives said that both agencies have been quietly building mortgage market share. Jeffrey London, deputy director of the VA’s loan guaranty service, reported that purchase-mortgage VA loan originations were up 11 percent in fiscal 2014, with 40 percent of the business being first-time homebuyers. Of that group, 80 percent took no-downpayment VA loans, the biggest selling point in the program, along with its relatively low costs. In earlier remarks, Housing and Urban Development Secretary Julian Castro revealed that ...

The FHA warned it would soon be sending notices to lenders who are overdue in completing their annual recertification packages, a rule violation that could land them before the Mortgagee Review Board for disciplinary action. Lenders who were unable to submit their recertification packages containing the required financial reports, annual recertification statements and the renewal fee payment will be receiving notices of deficiency from the FHA. FHA extended the filing deadline to June 27, 30 days after the deployment of the new Lender Electronic Assessment Portal (LEAP) system used in the lender recertification process. Traditionally, lenders were required to access both FHA Connection and Lender Assessment Sub-System (LASS) to complete the annual recertification process. LEAP will now enable lenders to complete all ...

Total originations of FHA forward and home-equity conversion mortgages across the U.S. and in the territories increased from the first to the second quarter, with California accounting for the lion’s share of all FHA loans produced by state. Production of FHA-insured forwards, including jumbo loans, and HECM loans during the first half of 2014 totaled $68.3 billion, a whopping 49.0 percent drop from volume reported over the same period last year. On the other hand, total originations in the 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands rose 11.5 percent quarter-over-quarter. Originations totaled $36.1 billion in the second quarter. Forward mortgages accounted for $61.1 billion of new FHA-insured loans originated during the first six months while HECMs comprised $7.2 billion of loans produced over ... [ 1 Chart ]

The liquidity coverage ratio rule recently finalized by federal regulators will hinder the revival of the non-agency MBS market, according to industry participants. Non-agency MBS are not counted as high-quality liquid assets (HQLA) under the rule, reducing incentives for banks to hold the securities. The Structured Finance Industry Group and others raised concerns about the lack of an HQLA designation for non-agency MBS at a time when the Obama administration is working to revive the non-agency MBS market. “There are...

The Federal Housing Finance Agency’s proposed single security for the GSEs met with conflicting views as the comment period ended this week. In August, the FHFA proposed a single-security structure to allow Fannie Mae and Freddie Mac to issue a common MBS to serve the single-family market. The proposal is aimed at eliminating Freddie’s pricing disadvantage and improving liquidity in the to-be-announced market.