Ginnie Mae production fell substantially in February from January as the government-insured lending market continued to lose steam in the first quarter of 2017. Ginnie mortgage-backed securities issuance fell 24.0 percent from January as fewer purchase and refinance loans were pooled for securitization, bringing February’s total issuance to just $32.2 billion. Year-over-year Ginnie MBS issuance, on the other hand, increased by 6.2 percent. The government-insured market set an all-time record of $545.0 billion in originations during 2016, a whopping 31.0 percent jump from the previous year. That total eclipsed previous records for originations of FHA, VA and rural housing loans guaranteed by the U.S. Department of Agriculture, according to data compiled by affiliate Inside Mortgage Finance. In addition, government-insured lending accounted for a record ... [ 3 charts ]

The FHA is nearing full implementation of a new loan review system (LRS) for managing FHA’s Title II single-family quality-control processes. No specific implementation date has been set but it could be sometime in the second quarter, the agency said. The LRS builds on FHA’s efforts to align the documentation of loan-review results. In addition, it incorporates the Single-Family Housing Loan Quality Assessment Methodology or defect taxonomy.The FHA said the new system would not be used to manage any aspect of the agency’s standard loan origination or endorsement processes. Rather, it would be used to review of test cases submitted by lenders seeking unconditional direct-endorsement authority. It would be used as well for various post-endorsement reviews of forward single-family loans. After the ...

By creating liquidity in Ginnie Mae mortgage-backed securities, liquidity coverage ratio (LCR) policies have attracted lenders – mostly nonbanks – whose funding relies more on securitizations – toward FHA loan originations, according to a new paper published by academicians. The paper, “Nonbanks and Lending Standards in Mortgage Markets: The Spillovers from Liquidity Regulation,” maintains that such lenders approve more FHA loans because they can sell the loans easily, given the high liquidity of the securitized product. The greater liquidity in Ginnie MBS has resulted in higher market share and eased standards especially for nonbanks and lenders with less deposit funding. It also has led to tighter standards for conventional mortgages, which are eligible for government sponsored enterprise securitization, wrote Pedro Gete and Michael Reher, researchers in the ...

FHA and VA borrowers took on slightly greater payment obligations in 2016 than they have in previous years, according to a new analysis and servicer ranking by Inside FHA/VA Lending. The average debt-to-income ratio for FHA loans securitized in Ginnie Mae mortgage-backed securities last year was 40.4 percent, up about half a percentage point from 2015. The average VA DTI ratio nudged up slightly to 38.3 percent. Average credit scores in the FHA program drifted slightly lower, while climbing 1.9 points for VA loans. The differences in credit quality between the two programs remained substantial: the VA attracts borrowers with higher credit scores and lower DTI ratios who take on larger loans. Some 36.3 percent of VA loans backing Ginnie MBS issued last year had credit scores of 740 and up, while just 13.2 percent of FHA loans fell in that category. Meanwhile, 67.1 percent of FHA loans had ...

The spike in FHA delinquencies in the fourth quarter of 2016 justifies the Trump administration’s decision last month to suspend and review the outgoing administration’s lowering of FHA mortgage insurance premiums, said House Financial Services Committee Chairman Jeb Hensarling, R-TX. Commenting on the Mortgage Bankers Association’s quarterly delinquency rate survey, Hensarling praised President Trump’s decision to set aside the 25-basis-point premium reduction, which Inside FHA/VA Lending reported first on Jan. 6, 2017. “Lowering premiums at this time was a big mistake,” said Hensarling. “The sudden increase in delinquencies makes it clear that President Trump was absolutely right to undo the previous administration’s irresponsible action.” Hensarling recalled that in 2013 “taxpayers had to spend $1.7 billion to bail out the FHA.” Going forward, the FHA must be fiscally sound, with a ...

The Department of Veterans Affairs has issued guidance regarding various aspects of the VA Home Loan program. On Valentine’s Day, the VA sent out a reminder to VA lenders regarding the continued use of the current National Pest Management Association (NPMA) Department of Housing and Urban Development Forms NPMA-99-A and NPMA-99-B. Circular 26-17-07 has instructions for filling out both forms. HUD NPMA-99-A, Subterranean Termite Protection Builder’s Guaranty, is completed and certified by the builder. The licensed pest control company completes the HUD-NPMA-99-B. Also on the same day, the VA announced a new requirement for staff appraisal reviewers (SARs). In 2015, VA released guidance, that established a low-risk and a high-risk appraisal review process. This requires SARs to review the LoanSafe Appraisal Manager product during the issuance of the ...

FHA single-family endorsements declined 5.5 percent from the third to the fourth quarter of 2016, losing some market share, while VA saw a modest uptick in guaranteed loans, thanks to robust refinancing activity. The FHA endorsed a total of $68.3 billion of forward mortgages during the fourth quarter, according to an Inside FHA/VA Lending analysis and ranking. That brought total production over a 12-month period to $255.6 billion (excluding Home Equity Conversion Mortgage loans), a 7.3 percent increase over 2015. FHA activity in the purchase market fell 13.6 percent in the fourth quarter though annual volume was up 14.3 percent from 2015. While FHA historically has been stronger in the purchase market, 2016 proved to be a more competitive year for FHA streamlined refinancing. FHA-to-FHA refinance endorsements rose 15.6 percent in the fourth quarter from the prior quarter, but ... [ 5 charts ]

The Department of Veterans Administration has issued guidance to clarify its new policy regarding student loans in underwriting VA guaranteed home loans. Specifically, the guidance shows lenders how to calculate a student-loan monthly payment when figuring out a VA borrower’s ability to repay. The clarification in the guidance applies to deferred student loans and the new policy will provide guidance for student loans currently in repayment or about to begin repayment within 12 months of a VA loan closing. How should a lender calculate a student loan monthly payment for loan underwriting purposes? A monthly payment need not be considered if the borrower provides written proof that the student loan will be deferred at least 12 months beyond the closing date, the guidance said. If a student loan is under a repayment plan or is about to begin repayment, the lender must consider the anticipated monthly payment in the ...

Agency mortgage servicers last year transferred some $369.44 billion of mortgage-servicing rights tied to mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae, according to an exclusive new Inside Mortgage Trends analysis. Thanks to an end-of-year surge, bulk MSR transactions accounted for most of the market. During the fourth quarter, some $76.69 billion of servicing changed hands in bulk transfers, a 76.5 percent jump from ... [Includes three data charts]

Late last week, when the Department of Housing and Urban Development pulled the plug on reducing FHA premiums by 25 basis points, it was originally thought that perhaps, in time, the new White House might change its mind. As one Washington insider noted, “There was a feeling that with a little education and time and with the right decision-makers in place, that maybe they would let the cut go through. Now I’m not so sure.” An industry lobbyist – with a deep resume on Capitol Hill ...