Private mortgage insurers that survived the housing market collapse are quietly gnashing their teeth over new eligibility rules proposed by the Federal Housing Finance Agency, which likely will cause some to reengineer their corporate structures and/or raise additional capital. The good news for the legacy firms – Genworth, Mortgage Guaranty Insurance Corp., Radian and United Guaranty – is that they have the financial ability to meet the new capital standards. The bad news – for this group and MI newcomers – is that the FHFA’s proposals would narrow the competitive gap between the private MIs and the FHA. One trade group official, speaking under the condition his name not be used, noted...

A promising surge in purchase-mortgage lending was the key ingredient in the 13.3 percent increase in agency issuance of single-family MBS during the second quarter of 2014, according to a new market analysis and ranking by Inside MBS & ABS. Fannie Mae, Freddie Mac and Ginnie Mae issued a total of $212.23 billion of single-family MBS during the second quarter. That was a nice gain from an exceptionally poor $187.38 billion in production during the first three months, but it still marked the second lowest quarterly volume since the beginning of 2005 – and it fell short of the $213.12 billion produced at the low point in the financial crisis at the end of 2008. The agencies securitized...[Includes two data charts]

The Home Affordable Refinance Program has nearly reached the practical limit of eligible homeowners willing and/or able to refi – whether or not the regulator of Fannie Mae and Freddie Mac further tweaks the program’s eligibility requirements, say industry observers. This week, Federal Housing Finance Agency Director Mel Watt met with community leaders in Chicago in a town hall-style meeting to discuss the benefits of HARP. Last fall, the agency launched a nationwide public awareness campaign to reach eligible borrowers and encourage them to participate in HARP, with little apparent success. “We are...

The modest rebound in the housing market during the second quarter of 2014 produced a solid increase in the volume of home loans with private mortgage insurance securitized by Fannie Mae and Freddie Mac. A new Inside Mortgage Finance analysis and ranking reveals that the two government-sponsored enterprises securitized $37.36 billion of single-family mortgages with private MI coverage during the second quarter. That was up 24.7 percent from the first three months of the year, which had produced a dismal $29.95 billion of MI-insured loans in new GSE mortgage-backed securities. By comparison, total GSE business was...[Includes two data charts]

U.S. Bank became the latest casualty in the government’s offensive against lax underwriting and improper origination of FHA mortgages after the bank to pay $200 million to settle all related charges. The Minneapolis-based bank became the seventh FHA lender since 2012 that has entered into settlement agreements with the Department of Justice and the Department of Housing and Urban Development to resolve alleged violation of the False Claims Act and the Financial Institution Reform, Recovery and Enforcement Act, according to Inside FHA Lending’s analysis of government data. The government lawsuits allege that the banks’ certification of loans as eligible for FHA insurance under the direct endorsement program violated the FCA. The banks’ misconduct allegedly contributed to the legacy losses that crippled the FHA Mutual Mortgage Insurance Fund and placed the ...

It has been barely a month since the FHA deployed its Lender Electronic Assessment Portal (LEAP 3.0), but lenders are already having difficulty executing some functions in the new system. Lenders are complaining about how hard it is to provide access to independent public accountants (IPA) for purposes of recertification functions, as well as difficulties in making changes to existing branches or adding new ones or changing cash flow accounts. Lenders are concerned they may be sanctioned or penalized if they make a mistake, but the FHA seems not inclined to do this because the system is new. “[We] are highly focused on correcting these issues, and hope to have these functions working properly very soon,” the agency promised in a recent note to FHA lenders. The FHA said it is also aware of the complications that some lenders have faced in submitting their annual recertification in LEAP. Many of these problems have been addressed and the deadline for submission of recertification packages has been extended as well, the agency noted.

FHA lenders reported a significant increase in the number of FHA-insured loans originated in April, breaking a downward production spiral that began in the third quarter of last year. Whether this marks a turnaround for the market, however, is uncertain. April closed with $10.3 billion in total FHA originations, up 18.5 percent from March but down 51.7 percent from the same period a year ago. This surge in FHA financing occurred despite the rising costs of obtaining an FHA loans and access-to-credit issues, which have narrowed the gap between FHA and conventional loans with private mortgage insurance. Spring and Fall are the busiest times of year for home sales which might explain the spike, according to real estate agents. FHA fixed-rate mortgages comprised 95 percent of April’s production, with purchase loans accounting for 78 percent of loans originated during the month. FHA lending trends, however, show ... [2 charts]

The FHA has announced new principal limit factors (PLF) for Home Equity Conversion Mortgages along with instructions to lenders to ensure that borrowers and their non-borrowing spouses understand the benefits and disadvantages of a reverse mortgage. The new PLF tables have been wholly revised and now include PLFs for use where the borrower has a non-borrowing spouse younger than age 62. In recent guidance, the FHA urged lenders to ensure that borrowers are provided with an analysis of the cost of a HECM loan and its benefits so that they can decide whether a reverse mortgage would meet their financial needs. Lenders also must advise prospective borrowers and their non-borrowing spouses to consult with a housing counselor whether PLFs below 20 percent may or may not actually improve their financial situation or meet their special needs. “Significant consideration should be given to the ...

The FHA has extended indefinitely the timeframe during which servicers may begin to foreclose on properties with reverse mortgages while it considers possible steps to protect non-borrowing spouses of deceased reverse-mortgage borrowers from outright eviction from their homes. The latest action stemmed from a June 10 court order, which found that current statutory protection for reverse mortgage borrowers against forced eviction and foreclosure extended to their spouses even if the latter is not a co-signer on the note. Non-borrowing spouses of deceased Home Equity Conversion Mortgage borrowers sued in federal district court in Washington, DC, last year to stop foreclosure on their homes and to challenge the Department of Housing and Urban Development’s interpretation of the regulation. Since launching the HECM program, HUD has required that a HECM be ...

The FHA is seeking comment on two new sections of a proposed single-family handbook for mortgage lenders. The handbook is in development. Once completed, it will serve as the centralized source of current and future FHA policies. Agency staff is collating policies from several handbooks, rules, mortgagee letters, notices and other sources to incorporate into the handbook. The FHA is publishing two new sections, “Doing Business with FHA – FHA Lenders and Mortgagees” and “Quality Control, Oversight and Compliance,” for comment. The “Doing Business” section lays out the requirements for FHA lender approval, including eligibility requirements, application processes, operating requirements and post-approval changes. The section also contains the recertification process as well as processes for applying for ...