FHA total originations rose 9.9 percent month-over-month in July as purchase mortgage activity continued to rise, according to Inside FHA Lending’s analysis of agency data. Lenders produced a combined $13.01 billion in new FHA-insured mortgages, up from $11.85 billion in June. Purchase mortgages accounted for 81.9 percent of total FHA production during July, the latest month for which FHA originations data were available. The July increase reflects an upward monthly trend in FHA lending that began in March, when FHA originations totaled $8.74 billion. Production then climbed steadily to $10.36 billion in April, $10.61 billion in May and $11.85 billion in June. Originations jumped 16.0 percent from the first to the second quarter. A recent analysis by affiliated publication Inside Mortgage Finance found that most of Ginnie Mae’s purchase activities (FHA, VA and rural housing loans) in the ...

Obama will meet with top banking executives and industry trade groups on Sept. 17 to explore potential solutions to lender overlays and other problems that hinder first-time homebuyers and other qualified borrowers from obtaining an FHA or conventional mortgage. The meeting is expected to touch on key lender issues, including credit overlays, government enforcement actions, regulatory burden and risk-based versus FHA pricing. Lenders say they are willing to originate single-family mortgages to qualified borrowers and first-time homebuyers but they feel the post-crisis environment has turned hostile against them. Repurchases and indemnifications have dampened their willingness to lend to moderate- and lower-income borrowers, they admit. Regardless of policy changes designed to increase lending in the lower credit score range (620 to 679), FHA enforcement actions to ...

The FHA Mutual Mortgage Insurance Fund account balances fell by $0.5 billion during the second quarter of 2014 to $45.3 billion due to higher claim payments and property expenses. Observers, nonetheless, remain optimistic the fund will return to full stability in 2015 with no further change in the mortgage insurance premium charged to borrowers. The MMIF’s total balances peaked at $48.4 billion in the third quarter of 2013 and then slipped gradually over the last three quarters, according to data in the FHA’s latest report to Congress regarding the financial health of the Mutual Mortgage Insurance Fund. Total revenues from premium collections, property sale, and note sale proceeds were $4.3 billion, while $5.1 billion was paid to cover claims and property expenses in the second quarter. This resulted in a negative$821 million cash flow in the quarter, the smallest outflow since ...

The average FHA credit score in the second quarter of 2014 continued to decline from the record highs of 2011, but remains well above the levels preceding the mortgage and credit crisis, according to FHA’s latest report to Congress on the state of the agency’s Mutual Mortgage Insurance Fund. The FHA’s second-quarter average credit score of 680 was 3 points below the previous quarter’s score and 13 points below the score during the same period last year. The report’s data suggest that FHA has accomplished its goal of shifting its market share to the 620-679 credit score bucket consistent with its target market while ceding its share of loans with scores exceeding 720 to the private MI sector. The last time borrowers’ average credit score hit 680 was in the second quarter of 2009. FHA officials said they are working to have 75 percent of the FHA lending in the ...

The Department of Housing and Urban Development is now qualifying investors for its sixth auction of non-performing loans (NPLs) amid nationwide protests calling for reform of HUD’s distressed note sale program. Single-Family Loan Sale SFLS 2014-2 includes 15,232 single-family, non-performing mortgages with a total unpaid principal of $2.3 billion. The sale consists of 10 loan pools ranging from $97 million to $825 million with collateral dispersed across the country, according to loan sale advisor DebtX. It is scheduled to bid on Sept. 30. On June 11, HUD sold a $4.8 billion portfolio of NPLs, the first of a two-part sale. The national offering consisted of approximately 23,200 loans divided into 16 pools ranging from $93 million to $1 billion. The loans are backed by properties across the ...

The first-quarter decline in FHA jumbo production spilled over into the second quarter as volume dropped another 21.7 percent, ending the first half of the year with $4.7 billion in new government-insured jumbo loans, according to an Inside FHA Lending analysis of agency snapshot data. On a year-over-year basis, volume fell 56.7 percent over the six-month period compared to the same period last year. Jumbo loans make up a tiny percentage of FHA’s overall portfolio. The FHA has been weaning itself away from jumbos after Republican members of Congress accused the agency of straying from its mission by subsidizing purchases of million-dollar houses. A statutory readjustment this year brought the FHA loan limit in high-cost areas down to $625,500, the same level as the high-cost loan limits for conforming mortgages in high-cost areas. The baseline loan limits for both conforming and FHA loans in 2014 ... [1 chart]

FHA single-family loan production picked up in the second quarter thanks to a surge in fixed-rate mortgage lending, according to an Inside FHA Lending analysis of agency data. A 15.2 percent increase in FHA fixed-rate volume helped propel overall FHA originations in the second quarter, which rose 16.0 percent from the first quarter. Adjustable-rate lending also was up 32.3 percent over the same period. FHA purchase originations increased 20.6 percent, while FHA-insured refinances rose by only 4.3 percent. On the other hand, conforming-to-FHA refinances were down 4.5 percent from the first quarter. FHA baseline lending (below $417,000) saw volume rise 17.6 percent, while FHA-jumbo loan amounts up to the statutory high-cost loan limit increased by 6.2 percent. On the other hand, the volume of jumbos exceeding ... [1 chart]

Roughly $1 billion in damages will flow through to the FHA and Ginnie Mae from Bank of America’s record $16.65 billion global mortgage-backed securities settlement with the Department of Justice. Although most of the DOJ’s case centered around faulty private-label MBS that BofA and its forbears (namely Countrywide and Merrill Lynch) underwrote during the housing boom, a small piece of the settlement is tied to servicing chores that the bank did for Ginnie Mae. And apparently, BofA didn’t do a very good job of servicing the underlying product. The bank took over as the subservicer on roughly $26.2 billion in mortgage servicing rights that once belonged to Taylor, Bean & Whitaker, a large nonbank based in Ocala, FL. When TBW went bust in the second half of 2009, BofA was given the subservicing contract. “BofA serviced the loans for us,” said Ginnie Mae president Ted Tozer. “And they did a ...

The FHA has issued two final rules enhancing consumer protections – one prohibiting lenders from charging additional interest on FHA-insured mortgages that are paid in full and another ensuring that borrowers of adjustable-rate mortgages receive earlier notice of rate changes. Both rules were published in the Aug. 26 Federal Register. The first rule eliminates the practice of charging the borrower a full-month’s interest even if the mortgage is prepaid in full before the end of the month. It adopted the proposed rule, which was issued for comment on March 13, 2014, without change. Effective Jan. 21, 2015, charging borrowers post-settlement interest, which is broadly defined by the Consumer Financial Protection Bureau as a “prepayment penalty,” will be prohibited for all FHA single-family mortgage products and programs. In the rule’s preamble, HUD said it expects lenders to ...

FHA loan volume continued to decline in the first half of 2014 despite continuing improvement in the quality of new originations and a high demand for purchase mortgage loans, according to Inside FHA Lending’s analysis of agency data. Overall, FHA production for the first six months of the year, excluding reverse mortgages, totaled $61.1 billion. While originations were up 16.0 percent in the second quarter, it was down a hefty 51.8 percent on a year-over-year basis. Purchase loans accounted for $47.3 billion of new FHA-insured loans made over the six-month period while an estimated $58.4 billion of loans had fixed interest rates. For FY 2014, volume was down 19.0 percent. “In FY 2013, approximately 702,000 FHA-insured loans were originated and this year we’re running at 560,000 loans, which is roughly 20 percent of last fiscal year’s total,” said an FHA analyst. “In the first quarter, approximately ... [1 chart]