Private mortgage insurers have announced changes in their premium rate structure to make their pricing more risk-based. The question is would this drive borrowers with lower credit scores toward FHA? Lenders say that while the private MI rate changes appear to make it more expensive for borrowers with lower credit scores to obtain a conventional mortgage, FHA’s life-of-loan policy could also cost borrowers more in the end. Analysts, too, are confident that private MI risk-adjusted pricing will not have any significant impact on FHA, positive or otherwise. Six private mortgage insurers have updated their premium rate cards in keeping with the new capital requirements under the government-sponsored enterprises’ Private Mortgage Insurer Eligibility Requirements (PMIERs) that were implemented in January 2016. The proposed rate changes are subject to ...

A clause in a New York home-purchase contract excluding government-backed financing from seller consideration is raising potential disparate impact concerns. A residential-lending manager in Sarasota, FL, emailed Inside FHA/VA Lending a copy of the contract with the controversial language embedded in Section 8 under the heading “Mortgage Commitment Contingency.” The paragraph read in part, “… institutional lender agrees to make a first loan other than a VA, FHA or other governmentally insured loan, to purchaser …”. “The language makes clear that no government-backed loans such as VA, FHA or USDA are acceptable to the seller [of the property],” the lender, who requested anonymity, said. “It is pretty rampant as cash is king and no one on the selling side wants to wait for payment.” Apparently, such clauses are nothing new. In fact, they have been around for ...

The FHA has issued emergency guidance for handling loan applications in areas affected by the water contamination crisis in Flint, MI, while the VA called for special relief for affected Michigan borrowers. A spokesperson for the Department of Housing and Urban Development said FHA lenders have been seeking guidance on how to handle single-family housing properties with an FHA-insured mortgage that may be affected by the tainted water supply in Genesee County., MI. The FHA’s two-page guidance stated that a property in the affected areas must first meet the agency’s property acceptability standards. Lenders are required to ensure that each property has a continuing adequate supply of clean, safe and potable drinking water. In addition, they must make sure the property is safe to occupy and free of any health or environmental hazard. HUD’s Single Family Policy Handbook ...

The FHA will soon begin implementing system enhancements to the Electronic Appraisal Delivery (EAD) portal to improve its functionality further and to address user feedback. Use of the EAD portal becomes mandatory on June 27, 2016, when appraisers will begin to submit their appraisals electronically to FHA, reducing the time for processing and closing an FHA-insured loan. The FHA will implement the changes on March 14. First, reference to the six-digit alphanumeric “one-time key” used by a mortgagee’s designated EAD administrator to log into the EAD portal will be changed to “appraisal portal one-time key.” References to the key will be revised throughout the EAD portal screens and system-generated messages. The appraisal portal’s one-time key is generated in FHA Connection and is the last step in the initial EAD login process. In addition, users will be given a ...

The FHA’s Home Equity Reverse Mortgage Information Technology (HERMIT) system will shift to a new vendor-operated host data center beginning March 21, 2016. Reverse Market Insight (RMI), a provider of data, analysis and portfolio valuation services for the reverse mortgage industry, has been tapped to manage, maintain and operate HERMIT. Launched in October 2012, HERMIT is an online, web-based automated system that monitors and tracks the FHA’s Home Equity Conversion Mortgage portfolio and automates insurance claim payments. HERMIT will shut down temporarily from 7 p.m., March 16, to 8 a.m., March 21, in order to complete the transition. The FHA said there would be no changes to the system’s functionality during transition to the host data center. User IDs and passwords for accessing HERMIT will remain unchanged. Following HERMIT’s transition to the ...

Delivery of FHA loans into Ginnie Mae pools declined 21.6 percent in the fourth quarter from the previous quarter, with correspondents accounting for the bulk of FHA loans securitized during the period, according to an Inside FHA/VA Lending analysis of Ginnie Mae data. FHA loans securitized in Ginnie mortgage-backed securities totaled $57.8 billion in the fourth quarter. Approximately $40.6 billion were purchase loans, down 20.6 percent from the previous quarter. MBS backed by FHA refinance loans totaled $17.2 billion, down 23.9 percent from the prior quarter. Correspondents and retail lenders accounted...[Includes two data tables]

The House of Representatives has passed legislation with provisions that would eliminate the cap on VA loan-guaranty limits and create a new office that would manage certain veteran benefits programs, including home-loan guarantees. The bill, H.R. 3016, The Veterans Employment, Education, and Health Care Improvement Act, passed by voice vote and was referred to the Senate for action. It contains...

Sellers delivered $35. 2 billion in VA loans into Ginnie Mae pools in the fourth quarter of 2015, down 15.0 percent from the previous quarter, according to Inside FHA/VA Lending’s analysis of Ginnie loan-level data. Retail lenders and correspondents accounted for the bulk of VA loans securitized during the quarter. Retail accounted for 45.8 percent of VA purchase loans, enjoying a slight edge over correspondents, which comprised 45.5 percent of securitized VA loans. The broker share of securitized VA purchase loans was 8.7 percent, down 21.2 percent from the third quarter. Meanwhile, retail accounted for 53.8 percent of Ginnie mortgage-backed securities backed by VA refinance loans in the fourth quarter, while correspondents’ share was down to 28.5 percent. The broker channel accounted for 17.7 percent of VA loans securitized during the period. The average FICO score on Ginnie VA loans in the ... [1 chart]

The FHA Mutual Mortgage Insurance Fund is projected to generate $9.1 billion in profits in FY 2017 but officials say they will not be reducing mortgage insurance premiums any time soon. Released this week, the White House’s proposed budget projects FHA will insure $204 billion in new forward, single-family mortgages with a negative credit subsidy of 4.42 percent for each loan, resulting in a projected profit of $9.1 billion. In fiscal 2016, the program is expected to generate $7.7 billion in profits. Separately, for the Home Equity Conversion Mortgage program, the proposed budget is projecting $18.5 billion in new reverse mortgage loans with a negative credit rate of 0.33 percent, netting $61 million in profits. During a budget briefing, Housing and Urban Development Secretary Julian Castro said there are no plans to change the current mortgage insurance premium. “We want to ensure our ...

The Mortgage Bankers Association and the National Association of Realtors have recommended policy changes the VA Home Loan Guaranty program could adopt to make it work better for veteran borrowers. The two industry groups offered their recommendations during a hearing before the House Committee on Veterans Affairs, Subcommittee on Economic Opportunity on the VA program. Testifying on behalf of the MBA, James Danis, president of Residential Mortgage Corp., urged the VA to issue a clear, final qualified mortgage rule for VA lending. The agency has had an interim final rule on QM and ability to repay in place since May 9, 2014, when it was published in the Federal Register. The VA recently issued guidance for lenders to better understand the standards but gave no indication as to when a final rule will be released. Danis recommended that the final rule provide an ample implementation period to ...