Activity in the Home Affordable Refinance Program continued to dwindle in the first quarter of 2016 as the post-housing crisis initiative winds down before expiring at the end of the year. HARP refinances fell to just 19,989 in the first quarter, down 5.2 percent from the previous period and off 36.8 percent from a year ago, according to a new Federal Housing Finance Agency report. While both government-sponsored enterprises saw a decline in volume, Freddie Mac volume was...[Includes one data table]
FHA activity was lackluster in the first three months of 2016 as loan originations fell 7.8 percent from the prior quarter, according to Inside FHA/VA Lending’s analysis of agency data. The weak first-quarter production of $53.5 billion appeared to continue a trend from 2015, which saw the fourth quarter close with $58.1 billion, down significantly from $73.7 billion in the third quarter. In contrast, FHA originations fared better year-over year. Loan production was up 35.6 percent in the first quarter compared to the same period last year. Purchase lending totaled $36.5 billion in the first three months with overall production trending downward during the period. Borrowers in the 640-679 and 680-719 credit score ranges made up the bulk of new endorsements for January and February, the latest FHA data show. It is unlikely that trend will change even if March endorsements were added. Between all ... [ 2 charts ]
The rapid deconsolidation in the Ginnie Mae issuer community and shift to nonbanks helped expand access for borrowers, but it’s also given the agency new issues to consider, officials said. Back in 2010-11, three Ginnie issuers dominated the program, noted Ginnie Mae President Ted Tozer during the Mortgage Bankers Association secondary-market conference in New York this week. But those three firms now account for just 14 percent of the agency’s business, and nonbanks held a combined 70 percent of the market, he said. Many new firms became issuers in part so they could get away from the credit overlays imposed by the national aggregators, Tozer said. The result is that the average score on a Ginnie loan is now 60 points lower than on loans securitized by Fannie Mae and Freddie Mac, he added. Michael Drayne, senior vice president in Ginnie’s office of issuer & portfolio management, said the ...
Recent circuit court rulings may bolster FHA lenders’ defense against the government’s heavy use of the False Claims Act in FHA lending cases, according to industry attorneys. In the years following the financial crisis, the Department of Justice and the relators bar have used the FCA aggressively to target banks and nonbank mortgage lenders for losses incurred by FHA due to poor underwriting and false certifications. The DOJ and the Department of Housing and Urban Development have recovered billions of dollars through settlements with various mortgage lenders and servicers, using increasingly creative theories of liability to hold them responsible for FHA losses. This week, the DOJ filed a lawsuit in federal court in Washington, DC, accusing Guild Mortgage of improper origination and underwriting of FHA-insured mortgage loans from January 2006 through December 2011. As in ...
There are important details in the recent M&T Bank settlement with the Department of Justice and in this week’s announced filing of a lawsuit against Guild Mortgage that could help lenders avoid a potential false claims lawsuit, according to industry observers. The government’s complaints against the two FHA lenders were brought under the False Claims Act, which penalizes acts that intend to defraud the government and taxpayers. The government has been using this powerful statutory tool in the mortgage arena in its attempt to recover FHA losses arising from fraud and noncompliance with agency requirements. As in previous FCA cases against FHA lenders, both M&T Bank and Guild Mortgage were accused of false certification, lax underwriting, poor quality control, failure to review early payment defaults, and failure to self-report deficient loans and remediate problems in a timely manner. In addition, the ...
The FHA has proposed to codify key improvements to the Home Equity Conversion Mortgage program and add new protections to senior homeowners to ensure they can remain in their homes and enjoy the benefits of an FHA-insured reverse mortgage. The proposed new HECM consumer protections include full disclosure of all HECM loan products and features. Lifetime interest rate increases on HECM adjustable-rate mortgages would be capped at 5 percent, while annual interest-rate increases on HECM ARMs would be limited to 1 percent. Lenders would be required to pay the HECM’s mortgage insurance premiums until the loan is paid in full, foreclosed on, or a deed-in-lieu of foreclosure is executed. In addition, the rule proposes to amend the definition of “expected average mortgage interest rate” to allow lenders, with the agreement of the borrower, to lock-in the rate prior to ...
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