Thanks to the Federal Reserves aggressive support for the agency mortgage market and continuing strength in the refinance program for underwater Fannie Mae and Freddie Mac borrowers, mortgage refi activity has accounted for 73.1 percent of 2012s surging production volume. But home-purchase lending started to regain some market share during the third quarter of 2012, according to a new Inside Mortgage Finance ranking and analysis. An estimated $143 billion of home-purchase mortgages were originated during the third quarter, up 10.9 percent from the previous three-month period. By comparison, refinance production was up just 2.8 percent from the second quarter. The purchase-mortgage sector still has...[Includes three data charts]
Department of Housing and Urban Development Secretary Shaun Donovan said this week HUD is considering additional steps to improve the financial health of the FHA single-family program, including raising FICO score requirements and supporting legislation that would take the FHA loan limits back to pre-crisis levels. The HUD secretary found himself in the hot seat before the Senate Committee on Banking, Housing and Urban Development, explaining the results of a recent actuarial audit that placed the FHAs Mutual Mortgage Insurance Fund capital reserve ratio below zero at negative 1.44 percent, representing a negative economic value of $16.3 billion. Sen. Richard Shelby, R-AL, ranking minority member of the committee, raised...
The Home Affordable Refinance Program surged to a record 286,044 loans during the third quarter of 2012, but volume began to slow in September, according to an Inside MBS & ABS analysis of new data released by the Federal Housing Finance Agency this week. HARP business was up 17.8 percent from the second quarter to the third, based on loan count, but overall refinance activity at Fannie Mae and Freddie Mac was up 21.8 percent for the same period. The program for underwater Fannie and Freddie borrowers saw a huge increase in volume at the start of the year as lenders implemented a series of changes in the program. Activity surged again in the second quarter when loan-to-value limitations were largely taken out of the equation. But HARP volume fell off...[Includes one data chart]
The Department of Housing and Urban Development warned that an extraordinarily high percentage of loans in claim status can trigger a lender monitoring review to ensure the lenders capacity to meet indemnification requirements. A high loan defect rate may be one of several factors used to target FHA lenders for a special review to determine the amount of risk a lender might pose to the safety and soundness of the FHAs single-family mortgage insurance program, according to Justin Burch, director of the Quality Assurance Division at FHA during a webinar hosted this week by Inside Mortgage Finance. If you are a lender that is...
The mortgage banking industry will support reasonable efforts to protect the FHA Mutual Mortgage Insurance Fund as long as the changes dont expose FHA lenders to onerous liability risk and treble damage claims, which could force them to limit or curtail their FHA lending, said the Mortgage Bankers Association. MBA President and CEO Dave Stevens said appropriate protections for the FHA are clearly needed, but they should not go so far as to shut down or restrict access to affordable credit and sustainable homeownership, particularly for first-time homebuyers. He said the industry is most concerned with FHA proposals to seek authority from Congress to extend indemnification requirements to all direct endorsement (DE) lenders and for an amendment to eliminate the knew or should have known standard with regard to fraud or misrepresentation. Both proposals are...
Federal Reserve Chairman Ben Bernanke late last week reiterated his view that tight underwriting standards set by lenders are hindering a broader recovery of the housing market. Lenders, meanwhile, cite concerns with repurchases and regulatory uncertainty. Bernanke noted that low home prices and historically low interest rates have not prompted the powerful housing recovery that has typically occurred in the past after housing problems. Unfortunately, while some tightening of the terms of mortgage credit was certainly an appropriate response to the earlier excesses, the pendulum appears to have swung too far, restraining the pace of recovery in the housing sector, he said. More than half of the lenders that responded to the Feds senior loan officer opinion survey earlier this year said...
The first-time homebuyer share of home-purchase activity and the FHA share of home-purchase financing have each fallen significantly since peaking in 2010, according to results from the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. The trends appear to be tied to lender underwriting requirements and the cost of FHA loans. In May 2010, first-time homebuyers accounted for 45.8 percent of home purchases, based on the three-month moving average. In October 2012, the share fell to 34.7 percent. Similarly, the FHA share of home-purchase financing fell during that time from 36.7 percent to 26.3 percent. Financing of first-time homebuyers with low downpayments threatens...
The recent actuarial report that showed the FHAs insurance fund is underwater to the tune of $16.3 billion ought to sound an alarm for policymakers to refocus the agency on its original public mission, some leading policy experts say, and perhaps even motivate them to resolve Fannie Mae and Freddie Mac while theyre at it. I think FHAs financial condition is extremely precarious much worse than FHA and HUD are making it out to be, said long-time critic Edward Pinto, a resident fellow at the American Enterprise Institute, a conservative think tank in Washington, DC, and a former official at Fannie Mae. As he sees it, todays very low interest rate environment means the economic value of FHAs forward mortgage fund really is a far worse at a negative $31 billion. And when you throw in the negative on the reverse [mortgage] program, you get close to $35 billion. Compounding the problem is...
Lenders face increased regulation under policy changes designed to bring the FHA Mutual Mortgage Insurance Fund back to positive within the fiscal year and reduce the likelihood of a Treasury bailout to shore up the FHAs claims-paying ability. The Department of Housing and Urban Development late last week announced a hike in FHA premiums and other changes designed to restore the FHAs insurance fund, which had a negative 1.44 percent capital ratio at the end of September 2012, according to a new actuarial review. Department of Housing and Urban Development Secretary Shaun Donovan blamed...
Servicers are on their way to completing required loss mitigation as part of the national servicing settlement well before the 2015 deadline, according to a report this week from Joseph Smith, monitor of the settlement. State attorneys general and federal regulators that helped reach the settlement said they are largely satisfied with servicers initial efforts. With servicers on track to fulfill much of their consumer relief commitments in the first year of this agreement, homeowners are finally beginning to see the light at the end of the tunnel, said Shaun Donovan, secretary of the Department of Housing and Urban Development. The settlement requires...