BNY Mellon will launch a new business later this year that would enable it to purchase, securitize and service reverse mortgages and provide advisory services to lenders that offer such loans. The new business segment, Home Equity Retirement Solutions, is aimed primarily at retirees experiencing significant financial shortfalls. “We view the funds generated by suitable reverse mortgages as an additional fixed-income component of retirement portfolios, an important part of retirement planning that complements other aspects of the plan,” explained Michael Gordon, managing director for BNY Mellon Investment Management. Gordon noted BNY’s long record of accomplishment working with retirees, including managing assets for 401(k) and defined benefit investments. He said reverse mortgages may now be more prudent based on ...

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 ...

The Federal Housing Finance Agency is set to take a comprehensive view of the impact any changes to the government-sponsored enterprises’ guaranty fees would have on the MBS market. Late last week, the regulator issued a “request for input” on the g-fees charged by Fannie Mae and Freddie Mac, prompting speculation that any changes to the fees won’t be implemented until 2015. The FHFA noted that the GSEs’ g-fees have increased from an average of 22 basis points in 2009 to 55 bps in 2013. The increases have been prompted by the FHFA along with Congress and changes made by the GSEs. Because of loan-level pricing adjustments – which in nearly all cases are rolled into the mortgage coupon – g-fees vary...[Includes one data chart]

WinWater Home Mortgage, a New York-based conduit managed by several Wall Street veterans, is ready to market its first jumbo MBS, but has also made inquiries about non-prime transactions as well, according to traders and lenders familiar with the company. WinWater plans to issue a $249.47 million jumbo MBS, according to a presale report released late this week by Kroll Bond Rating Agency. Not only is the bond WinWater’s first deal, it represents the first new issuance in the sector since late April when Credit Suisse came to market. The average combined loan-to-value ratio on the deal is...

MBS prices fell by roughly 100 basis points this week, but the downdraft could be short-lived thanks to the European Central Bank, according to MBS analysts and other market watchers. Late this week, the ECB cut its main interest rate to a record low 15 basis points, from 25 basis points. But in an unprecedented move, it also trimmed the interest rate it pays to banks on reserves to negative 0.1 percent. The move into negative rate territory is meant...

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]

FHA lenders are generally supportive of the agency’s proposal to add a new method for evaluating lender performance but may request certain adjustments to ensure they are not at great risk for enforcement action, according to compliance experts. Lenders believe the proposal for an additional performance metric to supplement the lender compare ratio under the Credit Watch Termination Initiative is a positive step toward providing a more well-rounded analysis of a lender’s performance when the FHA is considering further action. “In and of itself, the proposal is not a panacea, but it is certainly a step in the right direction,” said Brian Chappelle, a mortgage industry consultant. The proposal reflects the FHA’s belief that a number of factors influence a lender’s performance, not just its compare ratio. The compare ratio compares a lender’s rate of early defaults and claims to those for ...

The FHA is reportedly considering reinstating “spot” loans in condominium projects that were not on its approved development list to boost FHA-insured condo lending. Spot loans are currently prohibited, but the FHA is said to be reevaluating the product because of reports of first-time homebuyers having difficulty in obtaining FHA financing for condo unit purchases and seniors seeking reverse mortgages to tap the equity in their units. The National Association of Realtors is trying to break the impasse between the FHA and reluctant board of directors of condo projects that do not have FHA certification to resolve the financing issue. FHA-insured condominium lending has dropped to $884.4 million in the first quarter of 2014, down 70 percent from the $2.98 billion in total originations reported in the first quarter of 2013, according to Inside FHA Lending’s analysis of agency data. Even as the NAR tries to ...

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 ...