VA Lenders’ Compliance with CFPB’s Ability-to-Repay and Qualified Mortgage Rules. Until the Department of Veterans Affairs’ rule on ATR/QM is in place, all VA lenders must comply with the requirements of the Truth in Lending Act, as established by the Consumer Financial Protection Bureau’s ATR/QM rule, according to a recent agency guideline. VA will continue to guarantee all loans made in compliance with existing VA requirements, regardless of their QM status, the agency clarified. It urged lenders to refer to the CFPB guidance to ensure all their VA loans are ...

The Department of Housing and Urban Development sold 62,062 distressed loans in 2013 through its expanded Distressed Asset Stabilization Program (DASP) to increase recoveries to FHA’s Mutual Mortgage Insurance Fund. HUD made 10 offerings of nonperforming FHA-insured loans in a series of quarterly competitive auctions last year, participated in by pre-qualified bidders, including nonprofit organizations. The defaulted single-family mortgages were provided by FHA-approved loan servicers and sold through large national pools and “neighborhood stabilization outcome” pools. The NSO pools consist of loans in ...

The FHA's recently updated manual underwriting standards provide some objective criteria for qualifying more borrowers but, at the same time, some of those standards could bar certain people from obtaining an FHA mortgage, according to compliance experts. A key change in the guidelines is the lowering of the credit score threshold from 620 to 580 to allow manually underwritten borrowers – those that have received a “refer” recommendation from FHA’s Total Mortgage Scorecard or those that were not scored because they did not have credit scores – to use compensating factors in order to ...

Program eligibility is one of the top five reasons a loan can get an “unacceptable” rating in a post-endorsement technical review of a targeted sample of FHA loans. In a sample review conducted by FHA between July 1, 2013, and Sept. 30, 2013, 10 percent of the 6,692 targeted loans were defective due to program eligibility. Of that 10 percent, 76 percent were rated unacceptable by FHA. The results reflect the initial rating of each file reviewed during the quarter, which include conforming, deficient and unacceptable. An unacceptable rating may change if the lender submits mitigating documentation to FHA. But even if subsequently mitigated, the fact ...

FHA endorsements fell 25.1 percent in the third quarter of 2013 from the previous quarter as interest rates roller-coastered and refinancing lost steam, according to Inside FHA Lending’s analysis of FHA data. After delayed reporting for two months, the FHA also released data showing a 27.9 percent decline in new endorsements in November from October, with lenders reporting $8.7 billion in total originations for the month. Purchase mortgages accounted for 77.1 percent of November’s FHA volume. Fixed-rate mortgages comprised 97.2 percent of total originations for the month. On a quarter-to-quarter basis, production fell to ... [2 charts]

Ginnie Mae, Japan Sign Joint MOU; Russia Gets Help In Launching First MI. Ginnie Mae is helping Japan and Russia transition from their current secondary mortgage market structures to the U.S. company’s model. On Jan. 9, Ginnie Mae and Japan Housing Finance Agency signed a joint memorandum of understanding to exchange information and help Japan create a securities program tailored after Ginnie Mae’s successful mortgage-backed securities program. Japanese Prime Minister Shinzo Abe has directed the JHFA to make the transition within three to five years. Under the MOU, the two countries will hold ...

Recent announcements of revised loan-level price adjustments for the government-sponsored enterprises and risk-based pricing are fueling fears of FHA resurgence in the market. Consistent with the Federal Housing Finance Agency’s stated intent to raise the GSE guaranty fees by about 11 basis points, Fannie Mae and Freddie Mac released revised loan-level price adjustments (LLPAs) on Dec. 16. The upfront fee hike takes mortgage rates for affected borrowers close to FHA pricing levels, according to industry analysts.

The Department of Housing and Urban Development is seeking comment on a policy change that would reduce the FHA’s credit-score threshold from 620 to 580 to allow more manually underwritten borrowers to use compensating factors that would help them qualify for an FHA-insured mortgage loan. The change would strengthen manual underwriting and reduce FHA’s underwriting losses, resulting in more revenue per loan for FHA, HUD said. “The FHA can control costs through risk management practices,” the agency explained in a notice of rulemaking. “The lower costs are a gain to FHA.”

The Department of Housing and Urban Development this month expects to issue a final rule that would eliminate the process of requesting alternative FHA maximum loan limits due to improved access to, and availability of, home sales data. With the availability of comprehensive national databases of home sales transactions and continuing data-collection efforts, the regulations governing requests for alternative maximum mortgage limits have become outdated and unnecessary, the agency said.

The Department of Housing and Urban Development warned of tougher enforcement against servicers who do not make full use of HUD’s loss mitigation tools, as it announced the implementation of a newly revised tiered servicer ranking system. The new system, Tiered Ranking System II, features a new scoring mechanism that would help HUD determine which lenders get higher reimbursement rates on claim expenses based on their servicing performance.