A significant percentage of mortgage industry professionals think President Obama’s estimate that 250,000 borrowers will benefit from the FHA annual premium reduction is “too high” and that the impact will be minimal, according a new survey by the Collingwood Group. The monthly survey said 47 percent thought the estimate is too high and the price cut is not enough to generate a substantial number of new homeowners given that credit standards remain tight. They also said that the 50 basis point reduction in the annual premium is insufficient to make financing affordable. Meanwhile, 34 percent thought...

Mortgage industry participants are anticipating brisk refinancing activity during the first half of 2015 as a result of a 50 basis point cut in FHA’s annual mortgage insurance premium and expectations that mortgage rates will remain low. Lenders believe that with mortgage rates lingering around 3.75 percent, coupled with the annual MIP rate cut, an estimated one million mortgage loans could be ripe for FHA refinancing. “There’s real business out there,” said Brian Chappelle, a mortgage industry consultant. “Some economists also anticipate another 100,000 in purchase originations this year as a result.” The premium cut makes...

FHA lenders are gearing up to meet an anticipated increase in demand for purchase and refinance loans with mortgage rates falling to near-historic lows coupled by a 50 basis point cut in FHA’s annual insurance premium. Lenders hope the combination of lower mortgage rates and the revised FHA pricing structure will create sufficient incentive for more borrowers to purchase a home or refinance an existing mortgage. For example, Freedom Mortgage, 32nd in Inside FHA Lending’s 2014 ranking of FHA lenders, is looking to hire as many as 500 new employees to handle the anticipated surge following the FHA action. Stanley Middleman, chief executive officer of Freedom Mortgage, expects a robust FHA refinance market during the first half of 2015, tapering off in the second half. “Lower rates, coupled with premium reduction, put a lot of FHA borrowers in a position to get their ...

The half-percent annual premium reduction the FHA announced recently will likely enable the agency to reclaim the high loan-to-value segment of the mortgage market from Fannie Mae and Freddie Mac, according to analysts. Speaking with some originators that have been looking at the best way to securitize high LTV loans, Deustche Bank securities analysts said the lower FHA annual premium would put pressure on the government-sponsored enterprises to lower the cost of their guarantees. “The grapevine has anticipated for months that [g-fees] have little chance of going up and more chance of going down,” the analysts said. “But the specific risk triggered by the FHA move is that the cost of credit will now drop for high-LTV conventional borrowers.” Even before the FHA policy shift, private mortgage insurers have been pressuring the Federal Housing Finance Agency to ...

Production of loans with a VA guaranty was moderately strong in the third quarter of 2014, thanks to lower rates and increased demand for the no-downpayment loans, according to Inside FHA Lending’s analysis of the latest agency data. A 14.1 percent quarter-to-quarter surge helped the industry end last year’s first nine months with a total of $76.3 billion in VA loans, mostly purchase home mortgages taken out by a younger generation of war veterans. VA streamline refinancing also accounted for a substantial chunk of originations, 19.2 percent. Volume jumped from $19.5 billion in the first quarter of 2014 to $26.5 billion the following quarter. Lenders closed out the third quarter with $30.2 billion. Stanley Middleman, chief executive officer of Freedom Mortgage, said VA lending is on the upswing, driven by low interest rates. He thinks the VA home loan guaranty program has been ... [ 1 chart ]

The FHA has proposed key changes to rules for 203(k) consultants, direct endorsement (DE) underwriters and nonprofit groups that do business with the agency. The changes are part of a draft section, “Doing Business with FHA – Other Participants,” which will be incorporated into the overall Single Family Policy handbook. The draft contains information regarding eligibility, approval and recertification requirements for 203(k) program consultants, direct endorsement (DE) underwriters and nonprofit groups. The FHA posted the draft versions of “Doing Business with FHA – Other Participants in FHA Transactions” and “Quality Control, Oversight and Compliance – Other Participants in FHA Transactions” on its SF Housing Policy Drafting Table for public review and comment. The draft consolidate various existing Department of Housing and Urban Development handbooks, mortgagee letters, housing notices and ...

Ginnie Mae will soon introduce the third prong of a strategy to improve its oversight of participants in its mortgage-backed securities program – a performance scorecard for issuers – and monitoring of its risk. Essentially a “scorecard,” the Issuer Operational Performance Profile (IOPP) will enable issuers to better understand and comply with Ginnie Mae’s expectations. It also provides a way for issuers to measure and improve their performance and compare it to the performance of their peers. Final testing and training for IOPP began this winter, with deployment expected “in early 2015,” the agency said. Issuers will be scored monthly based on a series of metrics. Each issuer will be rated against its peers by applying a weighting algorithm and, in some cases, adjusting for certain control factors. Each issuer will receive two scores: one for operational management and ...

Streamlined FHA refinance volume increased slightly in the third quarter of 2014 as incentives put in place in 2013 continued to attract FHA borrowers, according to an Inside FHA Lending analysis of agency information. Streamlined refi production rose 2.4 percent in the third quarter of last year, closing a nine-month period with $14.2 billion in new loans. A comparison of nine-month FHA-to-FHA refinance activity, however, shows volume falling a hefty 79.6 percent year over year. As of Sept. 30, 2014, streamlined refinances accounted for 14.3 percent of total FHA originations. The FHA announced a revised streamlined refi program in December 2013 to help FHA borrowers with underwater mortgages to refinance without added cost or penalty. The loan does not require an appraisal or verification of job, income or credit. A perfect, three-month payment history is required and ... [ 1 chart ]

Roughly 90 percent of the time, residential loan officers never see the end mortgage customer, according to several weeks’ worth of interviews conducted by Inside Mortgage Finance. However, few in the industry think it’s a problem. “We have the technology not to see our applicants,” said Jim Picard, vice president of home loans for Denali Alaskan Federal Credit Union. The technology that Picard and others refer to is...

Fannie Mae and Freddie Mac securitized $46.91 billion of home loans with private mortgage insurance during the fourth quarter of 2014, down 1.9 percent from the previous quarter, according to a new Inside Mortgage Finance analysis. The drop in private MI volume nearly mirrored the 2.1 percent decline in overall mortgage-backed securities production by the two government-sponsored enterprises over the same period. For all of 2014, the volume of private MI loans included in Fannie/Freddie MBS was down 22.5 percent, while total GSE securitization tumbled 45.4 percent from 2013. While MI-insured purchase mortgages declined by 7.0 percent from the third quarter, securitization of refinance loans with private MI jumped...[Includes two data charts]