The revised defect taxonomy will hardly nudge banks to return to or increase participation in FHA programs despite tighter standards for identifying and curing defective loans, according to industry stakeholders.
In 2020, FHA is poised to take a significant chunk of high-risk business as Fannie and Freddie continue to draw back from the over-95% LTV market. VA is expected to continue its slow-growth trajectory.
Based on FHFA’s new 2020 loan limits, VA announced guidance for deter-mining the guarantee on loans to veterans with partial entitlement while Ginnie revised its definition of “high balance” loans.
Borrower demand for FHA-insured loans was strong in the third quarter due to low interest rates. Not surprisingly, refinance activity, streamline refinancing in particular, provided the boost.
VA loan-related provisions in the Blue Water Navy Vietnam Veterans Act of 2019 raise the maximum amount of entitlement available to veterans, the maximum guarantee of loans in excess of $144,000, a revised VA funding-fee table and a fee waiver for certain vets.
USDA lenders ramped up production in the third quarter of 2019 with a strong boost from purchase originations. More than 50% of total USDA originations were from correspondents. USDA servicing volume was up slightly from a year ago.
Buyout may be an option though an unnecessary one in addressing VA’s IRRRL problem, according to industry participants. An analyst suggests a recoupment issue can be cured by a cash payment to the borrower.
Correspondent production is still the leading source of government-insured loans, according to an exclusive survey, but retail gained ground in the third quarter. Wholesale-broker volume was up, but its market share contracted.
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