New issuance of single-family agency MBS dropped sharply in August as production slowed across the board at Fannie Mae, Freddie Mac and Ginnie Mae. A new Inside MBS & ABS analysis reveals that the three agencies produced $109.34 billion of single-family MBS during August, a 15.1 percent decline from July’s level. August 2015 was the slowest month since March, though it was 20.2 percent higher than a year ago. Freddie posted...[Includes three data tables]

Of course, there is a way to avoid the zero capital cushion dilemma. Congress can pass legislation to allow the GSEs to build capital or FHFA can act...

Wells Fargo this week said it would reinstate certain credit overlays on its FHA business segment after expressing frustration over FHA’s republished proposal on loan-level certification. The lender, which ranked second on Inside FHA/VA Lending’s top FHA lenders for the first six months of 2015, reiterated the need for clearer rules in order to originate FHA-insured loans without fear of litigation or enforcement action. The bank said it is very disappointed with FHA’s revised certification proposal, which was republished in the Sept. 1 Federal Register. “In spite of much input to FHA from various consumer groups and lenders over a long period of time, [the] proposal falls short of what is needed,” said Mike Heid, head of Wells Fargo Home Lending. “As a result, this will now force us to add back certain credit overlays on the FHA single-family program.” Other FHA lenders could follow Wells Fargo’s lead as some did when ...

Securitized FHA,VA and rural housing loans in Ginnie Mae mortgage-backed securities totaled $188.5 billion in the first six months of 2015, fueled by significant purchase and refinance activity, according to an Inside FHA/VA Lending analysis of Ginnie Mae data. An estimated $113.4 billion in FHA-insured mortgages were securitized during the first half of the year. Of that total, $60.6 billion were purchase mortgages and $44.2 billion were refinance loans. FHA purchase-loan production increased 58.8 percent in the second quarter from the prior quarter while refi lending jumped 160.8 percent over the same period as FHA’s reduced annual mortgage insurance premium began to take hold. The FHA loans that went into Ginnie MBS showed an average loan-to-value ratio of 92.8 percent and an average debt-to-income ratio of 39.7 percent. Borrowers’ average FICO score was 675.9, which was indicative of ... [ 2 charts ]

An FHA proposal to establish a deadline for filing insurance claims and revise existing policies that allow punitive penalties for missing FHA foreclosure deadlines could have a chilling effect on FHA lending and servicing, analysts warned. Housing policy analysts and industry attorneys say the two-part proposal issued on July 6 raises red flags for both borrowers and servicers and could potentially cause lenders to leave the FHA single-family mortgage insurance program. The Urban Institute describes the proposed rule as “a mixed bag, but on balance far more negative than positive.” “It represents a modest improvement to very harsh rules for missing established deadlines but imposes an unrealistic timeline for filing FHA insurance claims and an overly punitive penalty for missing that timeline,” the group said. Attorneys at K&L Gates in Washington, DC, are more ominous in their assessment of the ...

Many condominium projects in California are losing FHA and VA business because their agency approvals have lapsed or are about to expire, according to lenders. In Orange County alone, about 57 percent of condo developments have FHA or VA approvals that are near expiration, said Jon Shrum, vice president of Commerce Home Mortgage in Huntington Beach, CA. It is unclear how many developments have expired approvals but the number could be significant, Shrum said. Condos accounted for 2.9 percent of total FHA endorsements as of June 30, 2015, and that share has remained flat over the first six months of 2015 and on a year-over-year basis, according to FHA data. “We’re seeing a lot of condo complexes whose approvals are expiring, and they are not even aware of it,” he said. “As an FHA and VA lender, we try to reach out to the condo homeowners associations (HOA) to make sure they retain or renew their ...

The FHA has announced a new format for reporting results of quarterly post-endorsement technical reviews of single-family loans. Previously, the loan-level findings were grouped into five broad categories: file documentation, credit/underwriting, operation deficiencies, program eligibility and collateral/asset valuation. The top five reasons for an “unacceptable” rating were provided for each category. Loans were rated as “conforming,” “deficient,” or “unacceptable,” with the last two ratings based on the magnitude of the underwriting error. With the new format, the focus will be on the most prevalent unacceptable findings, regardless of category. The period upon which the reporting is based is also different, according to FHA.Instead of reporting the review findings on a loan sample in the most recent quarter, FHA will now wait for one quarter to pass before reporting on the sample. Emphasizing the frequency of ...

The FHA has discovered glitches in FHA Connection and in the Home Equity Conversion Mortgage calculation software, which are creating problems for HECM lenders. A bad field edit in FHA Connection is preventing mortgagees from completing their on-screen financial assessment update on HECMs with negative residual income. This hinders submission of reverse-mortgage transactions to FHA for insurance. The FHA has issued temporary procedures that include instructions on submitting a request for a waiver of penalties for late payment of mortgage insurance premiums on closed loans. The agency was also alerted to a second technical problem following the release of the HECM Calculator, Version 2.2. The software incorrectly defaults, in some cases, to the 2.5 mortgage insurance premium rate when a value is entered in the Cash from Borrower and Cash from Lender fields. The FHA is also issuing ...

The U.S. Department of Agriculture’s Single Family Housing Guaranteed Loan Program has tweaked its guaranteed underwriting system (GUS) to support an increase in the upfront loan guarantee fee. Effective Oct. 1, 2015, the upfront guarantee fee for USDA purchase and refinance loans will be raised to 2.75 percent from 2.00 percent. The annual fee will remain at 0.50 percent for purchase and refi loans. The increase helps cover the cost of operating the program, which requires no congressional subsidy to offset credit costs, the agency said. The fee hike, however, is raising concerns among rural housing lenders. An increase to 2.75 percent could add more than $4,000 to a $150,000 mortgage with a USDA guarantee and increase monthly payments. “A $5 increase in monthly mortgage payments may not sound like much but it could make a difference in qualifying a ...

The VA Home Loan Guaranty Program has issued guidance to clarify the notification requirement applicable to all holders of VA repurchase and mobile-home mortgage loans. Under existing regulation, holders of VA repurchase and mobile-home loans are required to report to the Department of Veterans Affairs any event that leads to the full payment of a VA-backed loan. The guidance requires all holders to report the status of all VA repurchase and mobile-home mortgages upon full satisfaction of the loan. All notifications must be sent directly to the chief of contract assurance at nashpm.vbaco@va.gov. For further questions, contact Ronnie Lamb at ...