While they are effective, the VA’s Frequently-Asked-Questions on the qualified mortgage interim final rule provide helpful guidance on certain aspects of Interest Rate Reduction Refinance Loans (IRRRLs) origination as they relate to the VA QM rule, according to an analysis by the Washington, DC, law firm K&L Gates. The intricacies of IRRRL treatment under the interim final rule suggest the product may continue to be subject to ambiguities disproportionate to its limited role in the mortgage marketplace, wrote authors Kristie Kully and Eric Mitzenmacher, attorneys with the firm. VA’s interim final rule provides that all VA loans are QMs. The authors note that while most VA loans are safe harbor QMs under the rule, certain streamlined refinance loans (IRRRLs) are entitled only to a rebuttable presumption. Under the VA interim final rule, an IRRRL is deemed to have safe harbor QM status if the ...

Certain aggregators of FHA loans are reportedly refusing to purchase FHA streamline refinance loans, fearing shoddy underwriting on the original loan might raise compliance issues down the road. How widespread is the problem is unclear but an industry consultant, who was tipped off by other aggregators, said the problem seems more of a servicing nature, rather than origination. Prior to 2010, FHA lenders originated many streamline refis with seller-funded downpayment assistance. Many of these loans ended up with high default rates, prompting FHA to eliminate seller-funded DPA and to tighten the FHA streamline refi program. Streamline refi originations fell and the program saw very little activity until the FHA revived the program with changes during the crisis to spur lending and help FHA borrowers refinance. Streamline refis do not require full underwriting. The basic requirements are that the mortgage to be refinanced must be FHA-insured, current on the ...

Rep. Elijah Cummings, D-MD, ranking member of the House Committee on Oversight and Government Reform, and Sen. Sherrod Brown, D-OH, ranking member of the Senate Committee on Banking, Housing and Urban Affairs, earlier this month expressed concern about the sale of nonperforming loans to private investors without sufficient protections for homeowners and neighborhoods. Both lawmakers fear that FHA may not be providing enough incentives to servicers to modify ailing mortgages and that certain investors may be more interested in foreclosure than a cure. The influx of private investors has crowded out first-time homebuyers and raised concerns about the long-term effects of investor-owned homes in communities where foreclosures run high. In a joint letter, the two lawmakers sought information from the Department of Housing and Urban Development about ...

House Approves Legislation Streamlining FHA Condo Rules, Allowing DE Lenders for USDA. Housing reform legislation that would ease FHA restrictions on condominium financing and allow delegation of loan approval authority to qualified lenders under the U.S. Department of Agriculture’s rural housing programs passed the House last week by a vote of 427-0. Described as an FHA reform bill, H.R. 3700, the “Housing Opportunity Through Modernization Act,” would modify FHA requirements for condo mortgages by streamlining FHA’s project certification requirements to qualify condominiums for FHA financing as well as making recertification less burdensome. H.R. 3700 would also expand the USDA’s Section 502 Guaranteed Rural Housing Loan Program for single families by delegating loan-approval authority to certain participating lenders. FHA and VA loan programs already ...

Cash-out refinances are staging a quiet comeback as rising home-price appreciation makes such deals feasible for more homeowners. The number of cash-out refinances continued to reach new recent highs in the third quarter of 2015, rivaling numbers not seen since 2008. Black Knight Financial said close to 300,000 cash-out refinances were originated in the third quarter of last year, and about one-million over the past 12 months. During that same time period, 42 percent of all first-lien refinances had a cash-out component, the highest share since 2008. In addition, the average cash-out amount was the most it’s been since 2007 at more than $60,000. In all, these homeowners tapped...

The FHA and VA mortgage servicing markets saw relatively little growth but steady performance trends during the fourth quarter of 2015, after a turbulent market early in the year. A new Inside FHA/VA Lending analysis of Ginnie Mae disclosure data shows delinquency rates edged slightly lower at the end of last year, although virtually all of the improvement was in the less-severe category of loans 30-60 days past due. The 60-to-90-day delinquency rate was unchanged for FHA loans but up slightly for VA loans. And both programs saw modest increases in loans more than 90 days past due. The data provide a mixed view of growth in the outstanding supply of FHA and VA servicing. According to Ginnie’s monthly summary, the outstanding balance of single-family mortgage-backed securities (excluding home-equity conversion mortgage pools) was $1.495 trillion at the end of ... [ 4 charts ]

The FHA flood insurance requirements could make it difficult or more risky for lenders to originate FHA loans in states with significant flood risk or where flood maps may not accurately reflect the current flood risks, the Mortgage Bankers Association warned. Testifying during a recent hearing on private flood insurance, Steven Bradshaw, executive vice president of Standard Mortgage and MBA representative, warned that FHA’s current requirement for lenders to secure flood insurance on properties only if it is located within a high flood-risk zone has had some unexpected adverse impact, particularly in the wake of hurricane-related catastrophes. Bradshaw noted that many homes that were destroyed by Hurricane Katrina were not located in special flood-hazard areas (SFHA) and therefore were not required to have flood insurance. “Sadly, these borrowers were often uninsured and the ...

The FHA has given lenders and servicers an additional extension through April 17, 2016, to submit due-and-payable notices when Home Equity Conversion Mortgage borrowers fall behind on their property tax or insurance payments. The extended deadline also provides FHA lenders and servicers an opportunity to pursue loss mitigation before initiating foreclosureThe latest deadline extension was the second such extension. In April 2015, the FHA announced a policy change providing HECM lenders and servicers an additional 60 days in which to initiate foreclosure proceedings against any troubled HECM borrower with a case number issued prior to Aug. 4, 2014, with a non-borrowing spouse. Lenders and servicers are required to comply with reasonable-diligence timeframes for such HECMs. Debenture interest will not be curtailed during this period. The April policy allows mortgagees full discretion as to when to use the extension.

The Department of Housing and Urban Development this week announced an insurance rate reduction for multifamily affordable and energy-efficient properties to stimulate production and rehabilitation of affordable rental housing. The new reduced rates will take effect on April 1, 2016, and will directly affect FHA’s Multifamily Housing Programs and properties housing low- and moderate-income families. For “broadly affordable” housing, the FHA is lowering annual mortgage insurance rates to 25 basis points. Rates for affordable mixed-income properties would be lowered to 35 bps. For energy-efficient properties, the annual rates would be reduced to 25 bps. To ensure that broadly affordable and energy-efficient properties benefit directly from the lower rates, FHA will limit the fees that can be charged on these loans. “The reduction in mortgage insurance premiums for FHA loans on ...

Issuers of Ginnie Mae mortgage-backed securities pushed a record $435.80 billion of government-insured loans through the program during 2015, according to a new Inside FHA/VA Lending analysis and ranking. Last year’s total Ginnie MBS issuance topped the previous record of $429.50 billion issued during 2009. The $435.80 billion total for 2015 includes securitization of FHA home-equity conversion mortgages and other single-family loans guaranteed by FHA, the VA, and the Department of Agriculture rural housing program from Ginnie pool-level MBS data that are not truncated. Production in 2015 hit its high-water mark in the third quarter with $128.23 billion in issuance, and then fell 18.0 percent in the final three months of the year. Purchase mortgages continued to account for most Ginnie business in 2015, 58.0 percent of the agency’s forward-mortgage securitizations. But a huge factor in the ... [ Charts ]