A general overhaul of the Department of Veterans Affairs’ Loan Electronic Reporting Interface is underway to convert it into a full service, end-to-end system capable of handling every phase of the loan process. Work on VALERI began in 2017, with the aim of integrating all business lines – loan origination, property valuations, and mortgage servicing – into what VA officials view as an automated underwriting system. “We are potentially looking at the redesigned VALERI as an automated underwriting system, an end-to-end system designed to better serve veterans and their families, lenders, servicers and appraisers,” said Jeff London, director of the VA Loan Guaranty Service (LGS), during an interview at the recent VA lender conference in Miami. The VALERI application has been used solely for servicing for the last 10 years. Since 2008, on a monthly basis, servicers have been uploading electronic data ...

Ginnie Mae is considering a tiered rating system to ensure that all participants in its mortgage securities program have sufficient liquidity and capital to meet their counterparty obligations. The agency is still fleshing out the idea of an “A-tier” issuer, which would likely develop into a policy in the near future, said Michael Bright, executive vice president and chief operating officer, during a recent interview with Inside FHA/VA Lending. “An A-tier issuer would be [a company that] has gone above and beyond in helping put together for us a risk management and liquidity plan that does not rely on liquidity providers, and whose defect and cure rates are low,” he explained. Such issuer/servicers also would be well capitalized. Ginnie is developing the metrics for such a system, as well as incentives for the A-tier issuers, Bright said He added that top-rated firms would be eligible for “concierge services” from the ...

The Department of Veterans Affairs recently withdrew a directive that was part of an early disclosure requirement for Interest Rate Reduction Refinance Loans just days after the measure took effect. Although the early disclosure measure became effective for IRRRLs closed on or after April 1, 2018, VA’ “Frequently Asked Questions” guidance issued on April 5 clarified some of the earlier provisions and removed a new disclosure to address lender concerns. The current VA Lenders Handbook requires a veteran to sign a statement showing he or she understands the effects of the IRRRL and how long it would take to recoup all closing costs. If the veteran’s monthly payment increases by 20 percent or more, the lender must certify that the borrower qualifies for the new monthly payment. The handbook, however, is unclear as to when the statement and lender certification must be delivered. Consequently, some ...

FHA-insured loans accounted for a modest chunk of mortgage-related consumer complaints submitted to the Consumer Financial Protection Bureau last year. According to the CFPB’s annual report on consumer disputes, the bureau received approximately 37,300 mortgage complaints in 2017, 13 percent of which were related to FHA mortgages. Loans with a VA guaranty and FHA-insured reverse mortgages accounted for 4 percent and 2 percent of the complaints, respectively. Conventional home mortgages had the biggest share of mortgage complaints – 48 percent – followed by “other type of mortgage” at 28 percent. Six percent of mortgage complaints were about home-equity loans or home-equity lines of credit. For mortgage complaints, 41 percent involved making payments (such as those involving servicing, escrow accounts and posting of payments), while 37 percent were related to borrowers’ ....

Legislation was introduced this week in the House Financial Services Committee that would strengthen oversight of FHA mortgage servicers to ensure their compliance with the agency’s loss-mitigation requirements. The FHA Foreclosure Prevention Act of 2018 (H.R. 5555) would require the Department of Housing and Urban Development to conduct servicer oversight, including sampling, compliance reviews, and direct information collection from borrowers whose files were sampled. “A decade after the devastating foreclosure crisis, we continue to see significant problems with the servicing of FHA loans that unnecessarily put homeowners at risk of foreclosure,” said Rep. Maxine Waters, D-CA, ranking member on the committee and sponsor of the bill. Waters said her bill would ensure that FHA servicers help families experiencing financial hardships avoid foreclosure so that they can ...

Lenders will now be able make VA loans to veterans who wish to purchase or refinance a home that needs alteration or repair, under new guidance issued by the VA. According to the VA, it has received inquiries from lenders that have expressed interest in originating and processing loans to finance home alteration and repair. The agency noted that the aging housing stock in the U.S. has spurred an increased demand for such loans. Due to their physical condition, older homes are often sold as “cash or conventional financing,” which immediately excludes VA financing and deprives veterans the opportunity to use their VA benefit. The new policy guidance makes the VA guaranty available to lenders looking to finance home alteration, repair, renovation and improvement. It also allows improvements to be included in the value and completed after the loan is closed. The lender disburses the loan proceeds to the ...

Issuance of new single-family Ginnie Mae mortgage-backed securities fell sharply in the first quarter of 2018, according to a new Inside FHA/VA Lending ranking and analysis. The agency issued $92.58 billion in MBS backed by forward mortgages during the first three months of 2018. That was down 14.8 percent from the previous three-month period and represented the lowest quarterly total since early 2015. The 1Q figure is based on truncated loan amounts reported in Ginnie’s loan-level MBS disclosures. Reports with unrounded single-family loan amounts show a total of $95.75 billion in first-quarter MBS issuance, including FHA reverse mortgages. The loan-level data reveal that production fell 6.9 percent from February to March, when just $28.21 billion of Ginnie single-family securities were issued. That was the lowest monthly volume since February 2015. Both the FHA and VA programs saw significant ... [Charts]

Ginnie Mae this week meted penalties to two of the nine issuers that received warnings from the agency for excessive refinancings of VA mortgages. Bloomberg reported that Ginnie barred NewDay Financial’s and Nations Lending’s from the more lucrative multi-issuer mortgage-backed securities pools, forcing them to issue custom pools. The restrictions became effective immediately. The agency’s action could reduce mortgage interest rates by 50 basis points for FHA and VA loans, which would benefit first-time homebuyers, said Jaret Seiberg, an analyst with Cowen Washington Research Group. On the other hand, the issuers Ginnie limited to issuing custom pools will end up making loans with higher rates, the analyst noted. Ginnie’s action is part of a joint effort with the Department of Veterans Affairs to crack down on loan churning and faster prepayments of VA loans pooled in Ginnie securities. Loan churning ...

Ginnie Mae’s anti-churning efforts have narrowed the spread between Ginnie and Fannie Mae mortgage-backed securities, prompting executives to say things are almost back to normal. In an interview with Inside FHA/VA Lending this week, Michael Bright, executive vice president and chief operating officer at Ginnie Mae, said the market and investors have responded positively to the agency’s efforts to resolve the churning and prepayment problems. “The Ginnie spread has fallen almost half a point and our securities have become more liquid,” he said. “We want to make sure we’re giving investors CPRs (constant prepayment rates) that they can model.” Bright said he cares less about the overall level of prepayment speeds. What he truly cares about is ensuring that when an investor purchases a Ginnie security, the prepay speed is correlated to changes in the interest rates and not the ...

FHA streamline refinancing fell significantly in 2017 from the previous year, according to an Inside FHA/VA Lending analysis of agency data. Lenders closed 2017 with $37.4 billion of FHA streamline refi loans, buoyed by a 12.2 percent increase in origination in the fourth quarter. However, business was down a whopping 34.5 percent year-over-year. The segment ended the first quarter strongly with, $13.05 billion, but faltered over the next nine months. Streamline refinancing accounted for 15.8 percent of total FHA originations in 2017. Twelve states, led by California, each reported FHA streamline refi originations in excess of $1 billion last year. The Golden State closed the year with $8.05 billion of FHA-to-FHA refis, which accounted for 21 percent of all FHA loans in the state last year. The highest FHA streamline refi-producers after California were, in sequential order, ... [Charts]