A trade association representing large financial institutions has asked the FHA to clarify its policy regarding the use of downpayment assistance programs on home purchases financed with FHA mortgage loans. The differences in the interpretation of the Department of Housing and Urban Development’s inspector general and the FHA of downpayment assistance programs (DAP), especially by state housing finance agencies, has created uncertainty among lenders, according to the Consumer Mortgage Coalition. In a letter to HUD Secretary Julian Castro, the CMC expressed concern that lenders may become unwilling to continue offering loans with assisted financing because of legal uncertainty. “This would be unfortunate for moderate-income borrowers nationwide, and it would unnecessarily limit the ability of [state housing finance agencies] to function,” the group said. SHFAs do not rely on taxpayer funding for ...

Nonbanks comprised a significant portion of Ginnie Mae business as independent mortgage companies replaced banks as primary securitizers of FHA and VA loans. In the third quarter of 2015, mortgage companies accounted for 60.8 percent of VA loans and 67.1 percent of FHA loans securitized in Ginnie pools. For mortgage companies, production of Ginnie mortgage-backed securities backed by FHA loans increased by 5.0 percent in the third quarter from the previous quarter and was up a whopping 118.1 percent during the first nine months of 2015 over the same period last year. Nonbank securitization of VA loans rose by a modest 1.5 percent quarter over quarter and by 83.6 percent over the nine-month period compared to the same period last year. Megabanks, whose assets exceed $1 trillion, were the second largest issuers of Ginnie Mae MBS, accounting for less than ... [3 charts]

Some observers say the reduction in the annual mortgage insurance premium earlier this year has put the FHA Single Family Mutual Mortgage Insurance Fund on an accelerated path to recovery. Whether that is enough to get the fund back to its statutory 2 percent capital reserve ratio remains to be seen. The FHA is getting stronger faster, said Brian Chappelle, a mortgage industry consultant, in an analysis foreshadowing the FHA’s November actuarial report on the state of the MMIF. Last year’s independent actuary projected FHA’s total loan production in 2015 at $124 billion, but the MIP cut has led to a 60 percent increase in the volume forecast, said Chappelle. In all likelihood, the FHA could be looking at more than $200 billion in total originations this year, he predicted. “When a business lowers its prices, it’s going to make it up in volume,” the consultant noted. “Thus, FHA revenue is going to be ...

The number of VA loans with a deficiency fell in April from March but was up 71.7 percent from the same period a year ago, according to the VA Lender Report Card. The report card includes VA loan reviews and deficiencies by month from April 2014 through April 2015. VA loan originations over the one-year period totaled 563,967, the report showed. Of those loans, 303,149 were purchase loans, 162,447 were streamlined refinances, and 98,371 were cash-out refis. A total of 39,037 loans were reviewed by VA, which comprised about 7.0 percent of total volume. Altogether, 14,793 loans (37.9 percent) had deficiencies. The average deficiency response time was 28.1 days. Of the 1,726 loans the VA examined in April, 613 (35.5 percent) contained deficiencies, down from 1,234 loans (33.7 percent of 3,662 loans reviewed) that were found with flaws in March. The number of deficient loans found in ...

A VA mortgage servicer must immediately schedule an inspection and protect a property securing a VA loan if the property has been left vacant or abandoned by its owners. According to new guidelines issued by the VA, loan servicers must conduct an inspection immediately after becoming aware that the property’s physical condition may be in jeopardy. If local codes require more extensive protection than what VA requires, servicers should adhere to local requirements, the agency said. Failure to protect and preserve the collateral may result in a reduced guaranty claim if the servicer’s failure increased the VA’s liability on the loan. Unless the loan is undergoing loss mitigation, a property inspection is also required before the 60th day of delinquency or before starting foreclosure, whichever is earlier, the VA said. In addition, a property inspection will be required at least once a month after ...

The Department of Housing and Urban Development’s Inspector General has slammed Ginnie Mae for understating the severity of misstatements in prior year financials. In a memorandum, the HUD IG said Ginnie Mae’s inadequate disclosures in a restatement notification did not help users of financial statements understand the full impact of the material misstatements. The reporting errors were identified in an IG audit of Ginnie’s fiscal year 2014 financial statements. According to the IG, the misstatements in the 2014 audit were due to improper accounting for FHA’s reimbursable costs and the flawed accounting treatment and inadequate disclosure of borrowers’ mortgage escrow funds held in trust by Ginnie in its defaulted issuers’ portfolio. These errors may have affected Ginnie Mae’s prior year financial statements as far back as FY 2011, the IG concluded. In its audit report, the IG ...

Fannie Mae and Freddie Mac securitized $59.07 billion of single-family loans with private mortgage insurance coverage during the third quarter of 2015, reflecting the increase in purchase-mortgage production, according to a new analysis and ranking by Inside Mortgage Finance. The flow of PMI-insured loans to the government-sponsored enterprises’ mortgage-backed securities program was up 12.3 percent from the second quarter, and it was likely the biggest such volume since the housing market collapsed in 2008. The data come from loan-level MBS disclosures, which Fannie started providing in 2013. The increased volume of privately-insured mortgages came...[Includes two data tables]

The mortgage refinance business began losing steam in the third quarter, but purchase-mortgage lending helped sustain agency single-family MBS production during the period, according to a new market analysis and ranking by Inside MBS & ABS. Fannie Mae, Freddie Mac and Ginnie Mae combined to issue $351.70 billion of single-family MBS during the third quarter of 2015, a slight 0.3 percent decline from the previous period. Even with the slowdown, year-to-date agency MBS volume of $976.40 billion had already topped the $929.49 billion in gross issuance for all of last year. The bright spot was...[Includes two data tables]

Fannie Mae and Freddie Mac saw a modest decline in the flow of home loans into their mortgage-backed securities programs during the third quarter of 2015, according to a new analysis and ranking by Inside Mortgage Finance. The two government-sponsored enterprises issued a total of $223.47 billion of single-family MBS during the third quarter, a 3.8 percent decline from the previous quarter. Freddie had a slightly larger downturn (4.1 percent) than Fannie (3.6 percent). Although overall MBS volume was down, lenders delivered...[Includes three data tables]

Riding a wave of heavy purchase-mortgage activity, Ginnie Mae issuers produced a record $128.23 billion of single-family mortgage-backed securities during the third quarter of 2015, according to a new Inside FHA/VA Lending ranking and analysis. The third-quarter figure, which includes FHA home-equity conversion mortgage MBS, was up 6.5 percent from the second quarter of this year. The previous record was $125.68 billion, set back in the third quarter of 2009. Loan-level MBS data, which do not include HECMs and have truncated loan amounts, show hefty gains in purchase-mortgage activity that more than offset sharp declines in refinance business. The flow of FHA purchase mortgages jumped 37.7 percent from the second to the third quarter, and VA purchase mortgages were up 37.9 percent over the same period. Meanwhile, refinance volume fell ... [ 2 charts ]