The secondary market in mortgage servicing rights rebounded during the second quarter of 2016 after starting the year with a thud, according to an exclusive Inside Mortgage Trends analysis of mortgage-securities disclosures by Fannie Mae, Freddie Mac and Ginnie Mae. The three agencies saw a combined $42.95 billion of MSR change hands in bulk transactions during the second quarter. That was up 20.6 percent from the first quarter, when ... [Includes two data charts]

Ginnie Mae issuers produced a hefty $125.42 billion of new single-family mortgage-backed securities during the second quarter of 2016, according to a new Inside FHA/VA Lending analysis of MBS data. The government-insured market continued to run hotter than the Fannie Mae and Freddie Mac sector. Ginnie MBS issuance – including FHA’s home-equity conversion mortgage program – was up 31.1 percent from the first quarter, while single-family MBS issuance by the two government-sponsored enterprises rose 26.2 percent over the same period. Excluding HECM, Ginnie issuance was up 31.5 percent in the second quarter. While FHA forward mortgages continued to be the biggest source of collateral, the VA program actually produced a bigger gain, 42.4 percent, from the first to the second quarter. VA production saw a major boost in refinance activity, up 58.4 ... [Includes four charts ]

House Republicans this week accused the Department of Housing and Urban Development of giving preferential treatment to political favorites in changes to FHA distressed asset sales. House Financial Services Committee Chairman Jeb Hensarling, R-TX, denounced changes HUD Secretary Julian Castro made to the Distressed Asset Sale Program (DASP), saying the moves help liberal special interests at the expense of private investors. Hensarling said the changes would create “preferential bidding” for certain buyers and restrict investor options. HUD expanded DASP in 2012 as a conduit for selling nonperforming FHA loans to investors with the proviso they must first help borrowers save their homes from foreclosure and foreclose only if all loan-modification options have been exhausted. Distressed note sales also helped stabilize FHA’s Mutual Mortgage Insurance Fund and have contributed more than ...

With the improvement in loan performance, credit quality and serious delinquency rate, some mortgage industry observers think the FHA is poised for another premium reduction before the end of the year. It is a better time for the Mutual Mortgage Insurance Fund, with fiscal year 2016 volume expected to exceed $220 billion, way more than the $170 billion the last independent actuarial report had predicted. Serious delinquency rates decreased in the first quarter to 5.31 percent, near the lowest level since 2008, according to FHA’s latest quarterly report to Congress. Rates for those vintages most affected by the recent economic recession (2006-2008) continue to decline. In addition, claims continue to be well below actuarial predictions – 32 percent less than predicted for the first quarter. Also, MMIF watchers are optimistic that the next actuarial report will show a higher capital cushion. According to the ...

The U.S. Senate this week passed legislation that includes reforms to current FHA restrictions on condominium financing, among other provisions. H.R. 3700, the Housing Opportunity Through Modernization Act of 2016, was approved without amendment by unanimous consent. The bill passed in the House of Representatives by a vote of 427-0 in February. The bill addresses problems facing buyers and sellers of condominiums. Specifically, the bill modifies the Department of Housing and Urban Development’s rental assistance and public housing programs, FHA’s requirements for condo mortgage insurance and the U.S. Department of Agriculture’s single-family housing guaranteed loan program. Among other things, the bill requires the FHA to make recertifications “substantially less burdensome,” while lowering the ownership-occupancy requirement from 50 percent to 35 percent. The current ...

The Department of Veterans Affairs has clarified policies that have raised questions among VA lenders but were not addressed during the agency’s annual lender conference in San Diego, CA, back in May. ? What is the VA’s policy regarding a non-purchasing spouse’s (NPS) credit? VA: The NPS’s liabilities need to be considered but not its credit history. ? What is VA’s policy regarding a loss that an NPS reports on a joint tax return? If a joint tax return shows a business loss, then that loss will have to be deducted from the veteran’s income in both community and non-community property states. What is reported to the Internal Revenue Service must be used when applying for a federally guaranteed loan In a situation where a couple has been faced with business losses, the veteran and his or her spouse may want to consider both being on the loan in order to potentially qualify. ? The VA Pamphlet states: “Account balances reduced to ...

The Department of Veterans Affairs has spelled out steps for disputing and resolving audit findings with the agency. The VA Home Loan Guaranty program has a policy-resolution protocol in place to increase both consistency among the VA regional loan centers (RLC) and responsiveness to lender inquiries. In seeking to resolve an audit dispute with an RLC, the lender should first consult the VA Lender’s Handbook before contacting the VA. Lenders also are encouraged to check with colleagues who might be familiar with issues underlying the dispute. The lender should contact the RLC with jurisdiction for an official response to case-specific questions. When disputing an audit finding or a deficiency letter, the lender should contact the loan specialist who conducted the audit. If, after communicating with the loan specialist, the dispute remains unresolved, the lender should take its concern to ...

CA Legislature Poised to Pass Protections for Widowed Homeowners. The California legislature is a step away from enacting legislation that would extend existing foreclosure protections in the state Homeowners Bill of Rights (HBOR) to widows, widowers and other heirs of deceased homeowners. The legislature passed the HBOR in 2012 to provide due process protections to homeowners and establish rules and procedures for communication between servicers and borrowers regarding options to avoid foreclosure. However, the bill’s protections did not extend to surviving spouses and successors-in-interest who may wish to continue paying the mortgage loan but could not assume the loan or afford the payment with the loss of the deceased homeowner’s income. Surviving family members may then seek a loan assumption or modification, only to be refused by the servicer because their names are not on the ...

Ginnie Mae has good reason to be concerned about rapid demographic change in its relatively small issuer community. Nonbank institutions – many of them relatively newly formed and based on nontraditional business models – are taking over the market. Nonbank issuers accounted for a whopping 69.4 percent of Ginnie’s issuance of single-family mortgage-backed securities during the first quarter of 2016. A year ago, their share was 64.6 percent. Two years ago it was 46.7 percent. With those kinds of gains on the production line, it’s not hard to see why nonbanks are claiming a growing share of Ginnie servicing outstanding. At the end of March, nonbanks owned 46.7 percent of Ginnie single-family mortgage servicing rights, up a hefty 11.5 percentage points in one year. That rate of growth can’t be accomplished just by producing new MBS because the servicing market simply doesn’t grow that fast. (Although the Ginnie market has grown significantly faster than any other segment of ... [ 2 charts ]

Investors in FHA’s distressed note sales program would be required to do more for homeowners to help them avoid foreclosure and keep their homes, thanks to improvements to FHA’s Distressed Asset Stabilization Program (DASP) announced this week by the agency. The changes appear aimed at consumer groups’ criticism of the Department of Housing and Urban Development for allowing profit-oriented investors to purchase the troubled HUD assets at a discount and flip the homes for a profit without ever helping the distressed homeowner. Although the transactions make good economic sense for investors and the government, struggling homeowners end up losing their homes without having tried any loan modification option that could have helped them avoid foreclosure. HUD launched the DASP in 2010 under pressure from Congress to help stabilize the FHA’s Mutual Mortgage Insurance Fund, which ...