Two industry trade groups expressed support for consolidating Ginnie Mae’s mortgage-backed securities program and creating a new MBS but they are at loggerheads on some of the details. Commenting on the Ginnie Mae proposal, the Securities Industry and Financial Markets Association (SIFMA) and the Mortgage Bankers Association (MBA) said the disagreements are mostly on how to resolve issues related to winding down the Ginnie Mae I MBS program and providing a conversion option for existing securities. “It is clear that further discussion is warranted, and direct engagement with key stakeholders should be beneficial,” the trade groups suggested. Ginnie Mae has received considerable support from a variety of industry players for its “straw man” proposal to shift to a single MBS program based on the existing Ginnie II. The program now accounts for more than 90 percent of all ...

JPMorgan Chase and Wells Fargo have both paid major settlements regarding FHA lending, and both have curtailed their participation in the program, according to a new analysis of Ginnie Mae data by Inside FHA Lending. During the first six months of 2013, Chase accounted for 11.8 percent of the FHA mortgages in newly issued Ginnie mortgage-backed securities. During the first half of 2014, its volume of FHA loans in Ginnie pools was down 75.8 percent from the same period last year, and its share of the market sank more than half, to just 5.1 percent. Jamie Dimon, Chase’s president and CEO, recently questioned why the bank should stay in the FHA business when legal costs are so high. The Ginnie data show it ... [1 chart]

Ginnie Mae is taking its issuer approval process online effective Sept. 1, 2014. Entities seeking to become an approved issuer of Ginnie mortgage-backed securities must file their applications electronically through the new Application Connection (AC), which is on the agency’s website. Ginnie Mae will no longer accept paper applications after July 31 as it shifts from the old to the new system. The agency is strongly encouraging potential applicants to complete two required courses through the Ginnie Mae Online University before filling out an application to become a Ginnie Mae MBS issuer. The courses are “Ginnie Mae 101” and “Applying to Ginnie Mae.”The two mandatory courses and the Ginnie Mae Online University provide free training and how to apply for approval, as well as the role and responsibilities of a Ginnie Mae issuer in ...

New FHA guidance regarding voluntary termination of FHA mortgage insurance does not affect separate guidance requiring borrowers to continue payment of their annual insurance premium regardless of the loan’s amortization terms. The FHA made the clarification in relation to Mortgagee Letter 2014-13, which requires written consents by the lender and the borrower in all voluntary terminations of FHA mortgage insurance. The requirement becomes effective on Oct. 1st this year. Specifically, the guidance requires FHA lenders to document that they have obtained the borrower’s informed consent to terminate FHA insurance on the mortgage. The change ensures that the lender would incur no liability and that the borrower understands the terms of the voluntary termination. Under current rules, the FHA may terminate mortgage insurance at the request of the borrower and the lender. The lender may cancel the insurance endorsement upon notification by the FHA commissioner that the insurance contract is terminated.

Ginnie Mae servicing remained flat in the second quarter of 2014, continuing a trend that began in the third quarter of last year as FHA refinancing fell and purchase activity slowed, according to Inside FHA Lending’s analysis of Ginnie Mae data. Servicing volume rose by only 0.7 percent from the first quarter, slightly lower from the 0.9 percent increase reported by Ginnie Mae servicers for the first three months of 2014. On the other hand, volume was up modestly by 5.9 percent year-over-year, data showed. Ginnie Mae servicers ended the second quarter with a total of $1.46 trillion in unpaid principal balance, up from $1.45 trillion in the prior quarter. Four out of the top five Ginnie Mae servicers were banks. Wells Fargo closed out the second quarter with $425.9 billion in servicing volume, a 0.2 percent decrease from the previous quarter but up 2.1 percent from a year ago. Its 29.2 percent market share put it ... [1 chart]

Ginnie Mae would play a greater role in a private-market partnership model envisioned in proposed housing finance reform legislation introduced recently by House Democrats. However, many in the industry doubt whether a Democrat-sponsored reform bill will pass in this Congress. Sponsored by Reps. John Delaney (MD), John Carney (DE) and Jim Himes (CT), the Partnership to Strengthen Homeownership Act would put Ginnie Mae in charge of all single- and multifamily mortgage-backed securities with government backing. Among other things, H.R. 5055 would create a new Ginnie Mae MBS for conventional mortgages backed by the full faith and credit of the federal government with minimum support from the private sector. Under the proposed model, private entities would assume up to 5 percent of the first-loss capital on the MBS. The remaining 95 percent would be shared between ...

NY Passes Bill to Reduce Number of FHA Loans that Would Fall Under Subprime. The New York Assembly recently passed legislation that would result in fewer FHA loans being classified as “subprime” under state banking law, according to the law firm Ballard Spahr. Already passed by the Senate, the bill would make permanent prior emergency rules issued by the Department of Financial Services, which raised the subprime threshold 75 basis points for those loans subject to the revised FHA mortgage-insurance premium cancellation policy. Although the emergency rules were set to expire on Dec. 31, 2013, the DFS granted an extension to allow the state legislature additional time to find a permanent solution, said Ballard Spahr attorneys. The bill passed with overwhelming bipartisan support and strong industry backing, and is expected to ...

Endorsement of FHA-insured reverse mortgages rose in the first quarter of 2014, although lenders say it may just be trailing figures reflecting the lag time between closing and approval for FHA insurance. Home Equity Conversion Mortgage guarantees totaled $4.0 billion in the first quarter, up 16.4 percent from the end of the fourth quarter in 2013 and up 4.1 percent from the same period last year, according to Inside FHA Lending’s analysis of agency data. Home purchase accounted for 92.7 percent of HECM volume but only 14.5 percent were fixed-rate. Initial principal amount at loan origination totaled $2.4 billion. The 16.4 percent increase was more likely due to the fact that a huge number of reverse mortgages closed in November and December were not insured by FHA until January, said Josh Moran, vice president of wholesale lending at Live Well Financial. Some lenders who delayed reporting to ... [1 chart]

Ginnie Mae has prohibited the pooling of Home Equity Conversion Mortgage loans that provide for future draws at a fixed rate of interest starting June 1, 2014. The agency said servicers that are committed to advance funds to borrowers at a fixed rate could become seriously undercapitalized if interest rates rise from the time of origination. “The impact of negative spreads between a fixed note rate and future prevailing rates could be exacerbated in such loans, and endanger the servicers’ capacity to meet their HMBS (HECM mortgage-backed securities) obligations, which require the issuer to maintain the capacity to advance funds as required under the HMBS program,” Ginnie explained in a recent memo to issuers. Program requirements include the funding of draw requests from borrowers and buying all related participations out of pools when the outstanding principal balance of the related HECM loan reaches 98 percent of the maximum claim amount, Ginnie noted. Borrower requests for ...

Ginnie Mae is now approving applications to issue agency mortgage-backed securities in as little time as six months, a far cry from two years ago when it took as long as 24 months, according to figures provided to Inside FHA Lending. In fiscal year 2013, which ended September 30, the agency approved 77 out of 122 new issuer applications. Since the beginning of the current fiscal year through April, the agency has processed 47 new applications resulting in 20 approvals. A spokesman for Ginnie noted that the number of applications processed in fiscal 2014 was impacted “by the government shutdown” but also by the development of a new online application tool that will be rolled out this year. “The time it takes to get a Ginnie Mae approval has been getting better – as in faster,” said David Lykken, managing partner of Mortgage Banking Solutions, a consulting and advisory firm. “It’s true that the number of ...