Total originations of reverse mortgages with FHA insurance increased in the first three months of 2015, according to an Inside FHA/VA Lending analysis of agency data. Home Equity Conversion Mortgage production, overall, rose 3.0 percent to $3.9 billion from the fourth quarter of 2014 and was down 2.0 percent on a year-over-year basis. HECM purchase loans far outpaced refinances, which accounted for only 14.5 percent of total HECM volume in the first quarter. Lenders reported a total of $2.3 billion in initial HECM principal amount at loan origination. Meanwhile, there is continued investor interest in HECM mortgage-backed securities (HMBS), according to Ginnie Mae. The unpaid principal balance of HMBS climbed to $48.9 billion in FY 2014 and the number of participations (the funded portions of HECM loans that have been securitized) has increased to 6,585, 856. HMBS issuance was ... [1 chart]

The National Reverse Mortgage Lenders Association is seeking guidance from the Consumer Financial Protection Bureau on how to design reverse mortgage advertisements without triggering regulatory scrutiny. Peter Bell, NRMLA president and chief executive, said he had sent a Freedom of Information Act request seeking access to the particular ads that the CFPB sought comment on in a recent study on reverse mortgage advertisements. The study found that consumers who viewed the ads were left with misimpressions about reverse mortgages. For example, consumers were confused about reverse mortgages being loans. Some thought that home-equity conversion mortgages are a “government benefit” or that they could ensure that homeowners could stay in their homes for the rest of their lives. Others complained of difficulty reading the fine print and that ...

The FHA plans to issue a proposed rule in the fall that would allow it to insure single-family condominium units in multifamily projects, according to the agency’s regulatory agenda for the second half of 2015. The proposed rule would cover condo units that are attached, detached, semi-detached or manufactured. It would apply as well to undivided interests in the common areas and facilities that serve the project. The proposed change would clarify and ensure lender compliance with the Housing and Economic Recovery Act of 2008. HERA moved FHA’s authority to insure single-family condominiums from Section 234 to Section 203 of the National Housing Act. However, because Section 203 does not provide the same authority for FHA, rulemaking became necessary. HERA also granted FHA the authority to issue administrative notices to convey condominium policy guidance until a ...

Americans were too busy refinancing and shoveling snow to get new home-equity loans during the first quarter of 2015, a new Inside Mortgage Finance analysis reveals. Mortgage lenders did an estimated $19.5 billion of home-equity lending during the first three months of 2015, based on new commitments for home-equity lines of credit – by far the most active part of the HEL market – plus originations of closed-end seconds. That was down 7.1 percent from the fourth quarter of last year. Despite the slowdown in the first quarter, home-equity production was...[Includes three data tables]

Refinance lending fueled the growth in mortgage originations during the first quarter of 2015, although new data suggest that the purchase-mortgage sector is taking hold. Mortgage lenders originated an estimated $221.0 billion of refi loans during the first quarter, an increase of 51.4 percent from a revised fourth-quarter production estimate of $146.0 billion. Inside Mortgage Finance refi and purchase-mortgage estimates for all four quarters of 2014 were revised to reflect just first-lien mortgage originations. Refi loans accounted...[Includes three data tables]

An FHA proposal aimed at clarifying loan-certification rules is a step in the right direction but it needs more work, according to industry observers. Lenders declined to comment on the proposed form changes but they all agree that the proposal does not go far enough. The revisions aim to make the language in Form 92900-A (HUD Addendum to Uniform Residential Loan Application) clearer for both borrower and lender. Applicants for an FHA or a VA loan sign the addendum to certify to the government that the information provided by the borrower on the mortgage loan application is correct. By signing the addendum, the borrower certifies that he or she will make payments on the home loan or become indebted to the federal government upon failure to repay the loan. For lenders, signing the form certifies that the loan application meets all of FHA’s insurance requirements. This is where lenders often ...

Security issuances backed by VA loans totaled $35.5 billion in the first quarter of 2015, with VA streamline refinance loans accounting for 57.7 percent, according to an Inside FHA/VA Lending analysis of Ginnie Mae data. Approximately $20.5 billion in VA interest rate reduction refinancing loans were securitized during the first three months as borrowers took advantage of lower interest rates.“For the last three to four months, rates have been bottoming out again, and if rates are lower it makes sense to refinance,” said Jon Shrum, vice president of Commerce Home Mortgage, a VA-certified lender in Huntington Beach, CA. An estimated $14.5 billion in VA purchase mortgages also were securitized during period. VA loans comprised 13.1 percent of all loans in Fannie Mae, Freddie Mac and Ginnie Mae mortgage-backed securities. California, Virginia, Texas, Florida and Washington, ... [2 charts]

Whistleblowers that bring a False Claim Act claim against an FHA lender based on previous publicly disclosed information have no standing, according to a recent federal district court ruling. Judge Jack Zouhary of the U.S. District Court for the Northern District of Ohio dismissed an FCA lawsuit against U.S. Bank because the whistleblower had neither direct nor independent knowledge of the bank’s alleged false claims – two basic requirements for standing in a whistleblower suit. The Advocates for Basic Legal Equality (ABLE), an Ohio-based legal aid group, filed an FCA lawsuit against U.S. Bank for allegedly disregarding and violating FHA regulations. The group accused the bank of filing false claims and collecting payments without evaluating loss mitigation alternatives before foreclosing on properties. According to ABLE, it had consulted with “many people,” whose mortgage loans were ...

The Department of Veterans Affairs has issued a policy clarifying that VA lenders must treat veterans in same-sex or opposite-sex marriages equally and fairly when processing and underwriting their home-loan applications. The policy is effective immediately. Under the new policy announced on May 19, the VA will process all claims and applications involving same-sex marriages in the same manner as claims and applications based on opposite-sex marriages, “without any additional scrutiny or development.” Language on VA forms, web pages and other VA communication materials will be revised to ensure that all veterans, VA program administrators and personnel are aware of the equal-treatment policy. The new instructions require VA lenders to accept a claimant’s or an applicant’s assertion of ...

VA loan servicers are now required to request a redemption quote from the agency’s property management contractor, Vendor Resource Management (VRM), to avoid any confusion in the future about such quotes. In recently issued guidance, the VA established standard procedures for redeeming VA property, after foreclosure, in states that allow “statutory redemption.” Statutory redemption refers to a borrower’s right to regain ownership of his or her home that has been foreclosed. Statutory redemption laws allow the borrower a limited amount of time to redeem their property if they are able to buy it back at the price for which it was sold at foreclosure. The redemption window varies by state and ranges from 30 days to 2 years. At the time of redemption, the entire underlying mortgage debt plus interest, foreclosure fees and other costs are due. In most cases, the servicer has ...