New issuance of agency MBS rose a modest 2.2 percent from January to February, and 2012 has started off on a somewhat stronger note than many observers had expected. Fannie Mae, Freddie Mac and Ginnie Mae issued a total of $116.5 billion of new single-family MBS last month – which made February the second-highest month in production since the beginning of last year. While issuance in the first two months of 2012 was down 5.6 percent from the same period in 2011, total production for this year would top $1.38 trillion at the current pace and that would be a measureable gain over...(Includes two data charts)

The refinance wave that lifted mortgage origination volume in the fourth quarter of 2011 appears to be holding steady in early 2012, according to a new Inside Mortgage Finance analysis. Average monthly securitization of refinance loans by Fannie Mae and Freddie Mac increased by 3.6 percent from the fourth quarter of 2011 to the first two months of this year. That’s somewhat faster than the 1.2 percent increase in average total securitization volume by the two government-sponsored enterprises. The refi market may gain momentum in the coming months. The Mortgage Bankers...(Includes four data charts)

The Obama administration this week announced price cuts for refinancing loans already insured by the FHA in an effort to provide relief to underwater homeowners, estimating that as many as 3 million borrowers could take advantage of the program. Beginning June 11, the FHA will lower its upfront mortgage insurance premium from 1.0 percent to .01 percent for streamlined refinancing of FHA loans originated before June 1, 2009, and reduce the annual fee for such refis from 1.15 percent to .55 percent. To qualify for the streamline refinancing, borrowers must be current on their existing FHA...

Department of Housing and Urban Development Secretary Shaun Donovan told lawmakers this week that the Obama administration was “encouraged” by the early activity in the revamped Home Affordable Refinance Program. And he was bullish on the prospects of HARP 2.0 picking up more volume as the program becomes fully operational by the end of this month. But available data and a new analysis by Inside MBS & ABS suggest that HARP 2.0 is not likely to generate much, if any, more volume over the next two years than HARP 1.0 did over the past three years. In fact, that was the Federal Housing Finance Agency’s...

Increased mortgage insurance premiums combined with hefty penalties assessed on lenders will generate additional revenue that may keep the FHA mortgage insurance program afloat. Nevertheless, the price for keeping the fund solvent will make fewer borrowers qualified for an FHA loan, according to lenders. Lenders say the upfront mortgage insurance premium increase will have little effect on borrowers because the charge can be rolled into the loan amount. Changes to the annual MIP, however, will decrease FHA business in general because the cost of the annual MIP will have to be included in the ...

The Department of Housing and Urban Development is seeking comment on a revised proposal to reduce the amount of closing costs a seller may pay on behalf of a borrower purchasing a home with an FHA-insured mortgage loan. The seller-concession reduction proposal is part of a series of steps that HUD has undertaken to restore the FHA Mutual Mortgage Insurance Fund’s capital reserve account while preserving the FHA as a source of affordable mortgage credit for low and moderate income and first-time homebuyers. Current HUD policy allows up to 6-percent seller concessions. Payments under the cap are considered ...

Failure by a sponsored third-party originator or by an FHA-approved mortgagee acting as a sponsored TPO to comply with FHA requirements will result in drastic administrative action that may include loss of FHA approval and civil penalties, the Department of Housing and Urban Development warned. The warning came as HUD clarified the requirements for the origination, closing and submission of mortgage loans for FHA insurance endorsement through sponsored third-party originators. The agency is clamping down on bad business practices that lead to high delinquency and claims rates, which ultimately weaken ...

The Department of Housing and Urban Development announced it will waive for another year the requirement for small lenders to submit annual audited financial statements to the Department of Housing and Urban Development when seeking FHA approval or renewal. The waiver relates to requirements spelled out in a mortgagee letter 2010 to strengthen risk management in the FHA single-family mortgage insurance program. Issued in June 2010, Mortgagee Letter 2010-20 implemented reforms that increased the net-worth requirements for FHA-approved mortgagees, eliminated FHA approval of loan correspondents and changed ...

The Department of Housing and Urban Development has updated the FHA TOTAL Mortgage Scorecard User Guide to reflect current FHA guidance on derogatory or delinquent credit and on borrower employment history. A lender is required to downgrade a mortgage loan application to “refer” and manually underwrite the loan for cash-out refinance transactions if any mortgage trade line, including mortgage line-of-credit payments, show any mortgage delinquencies within the most recent 12 months or if it shows less than six months of payments on the existing mortgage. The same guidance applies if the loan is ...

State housing finance agencies are returning to Ginnie Mae as investors’ appetite for state mortgage revenue bonds continue to wane and the government-sponsored enterprises are no longer major purchasers. With funding severely constrained, HFAs have turned increasingly to FHA-insured mortgage loans and Ginnie Mae securitization to finance their long-term, fixed-rate mortgage revenue bonds. The MRBs enable the state agencies to continue to offer mortgage products at affordable rates to lower-income and first-time homebuyers. President Obama’s FY 2013 budget noted that, among the new issuers, numerous HFAs have gone ...