FHA reverse mortgage production fell during the first nine months of 2014 compared to same period in the prior year due to changes made by the agency to the Home Equity Conversion Mortgage program. The nine-month HECM volume stood at $10.1 billion as of Sept. 30, down 14.8 percent from the previous nine-month period in 2013, according to an Inside FHA Lending analysis of agency data. Volume also fell 9.8 percent on a quarter-to-quarter basis. HECM purchase loans accounted for 93.5 percent of the market while a large majority, 77.0 percent, appeared to favor adjustable-rate reverse mortgages over fixed-rate reverse mortgages. Limited maximum draws in the first year and reduction of principal limit factors – actions taken by HUD to improve the HECM program – significantly decreased the demand for HECM products compared with ... [ 1 chart ]

FHA originations are expected to decline modestly in 2015 unless the agency gives in to industry pressure to lower mortgage insurance premiums and lenders ease up on their overlays, according to analysts. Analysts anticipate no meaningful decline in FHA market share next year but do expect some drop as private mortgage insurance become more competitive, especially among borrowers with 720+ FICO scores. Overall, analysts expect 2015 to be slightly better than 2014 because of increased purchase-mortgage lending, which is partly offset by lower refinance activity. Mortgage volumes should climb to $1.18 trillion in 2015, some say. At Keefe, Bruyette & Woods, analysts Bose George and Chas Tyson predict private MIs will take more market share from the FHA in 2015. They do not expect meaningful policy changes from the FHA this year. For example, FHA has given ...

Congress denied funding for an enhanced FHA housing counseling initiative for first-time homebuyers and rejected a request for authority to collect a new FHA fee to enhance quality-assurance reviews. President Obama this week signed the FY 2015 Consolidated and Further Continuing Appropriations Act, a comprehensive package of 11 funding bills for federal agencies. The bill does not include the provisions the FHA had sought to toughen enforcement and help lower costs for first-home purchases. The House passed the $1.1 trillion omnibus spending bill, H.R. 83, by a vote of 219-to-206 on Dec. 11, narrowly avoiding a government shutdown. The Senate approved the bill on Dec. 13. The bill allocates $47 million to the Department of Housing and Urban Development’s housing counseling program and $50 million for foreclosure mitigation counseling. It also provides $400 billion in ...

The Inspector General of the Department of Housing and Urban Development has announced a $300 million recovery from an earlier settlement between SunTrust Mortgage and the Department of Justice, Consumer Financial Protection Bureau, the HUD Office of the Inspector General, and 50 state attorneys general. The settlement resolved allegations of violations of FHA requirements in a joint complaint filed on June 14, 2014, by federal and state enforcement agencies. The suit against SunTrust alleged misconduct related to the origination and servicing of single-family residential mortgages. The problem loans were uncovered during a routine OIG review of targeted FHA-insured loans. According to the suit, as an FHA direct endorsement lender, SunTrust certified poorly underwritten loans for FHA insurance from January 2006 through March 2012, despite its knowledge of ...

Production of FHA-insured jumbo loans ballooned in the third quarter of 2014 reflecting heightened activity in this loan segment during the period. A 23.7 percent quarter-over-quarter surge helped push FHA jumbo lenders’ total volume to $7.71 billion at the end of the nine-month period ending Sept. 30. It was a significant increase for a segment that represents only a sliver of FHA’s overall business. However, compared to last year’s first nine months, volume was down by almost half (48.8 percent) as lenders struggled to keep pace with last year’s output. Strong purchase demand helped drive FHA jumbo originations (all FHA loans over $417,000 up to $625,500 in high-cost areas), as purchase mortgages accounted for 81.1 percent of all FHA jumbos originated during the first nine months of the year. Fixed-rates comprised 86.4 percent of FHA jumbos originated during ... [1 chart]

Ocwen Financial’s dry spell of acquiring nonperforming FHA loans out of Ginnie Mae mortgage-backed securities pools ended in early December with the nonbank servicing giant buying $253.1 million of delinquent product. Speculation, however, is mounting that Ocwen may not be long for the Ginnie Mae business, at least as a servicer. Ocwen’s disclosure of the “early” FHA buyouts came 11 days after it sold to an undisclosed buyer. In the first quarter, the company engaged in $646 million of early buyouts (EBO) and followed up with a $490 million EBO deal in the second quarter. However, EBO volume fell to zero in the third quarter. The December acquisition came in one fell swoop raising cautious, short-term expectations at Ocwen. “We expect to execute more such purchases in the next few months, as long as market conditions are favorable,” said Chief Investment Officer John Britti. As fast as it had ...

The Mortgage Bankers Association this week declined to participate in a panel discussion on FHA hosted by the American Enterprise Institute because the trade group did not believe the discussion would be balanced and though it would favor only a certain point of view. The topic was “FHA from 1934 to 1938: Lessons for Wealth Building,” with Ed Pinto, a resident fellow at AEI, and Dave Stevens, MBA president, as presenters. Stevens, however, decided to pull out of the event when he saw the format. In a letter to the AEI organizers, Stevens said he agreed to be a presenter thinking the debate “would be a balanced approach.” “When I first agreed to do this, I did not expect that the format would be 45 minutes of [Ed Pinto] and then no more than 12 minutes for me to respond,” he wrote. “That’s an extremely lopsided approach that did not appear to be ...

The 3 percent downpayment mortgages announced this week by Fannie Mae and Freddie Mac should be a better deal than similar FHA financing for stronger-credit borrowers, according to analysts. Final details of the conventional 97 loan-to-value ratio products were released this week to mixed but mostly favorable reviews. Although aimed at first-time homebuyers in Fannie’s MyCommunityMortgage and Freddie’s Home Possible programs, the products are also available for refinances of existing GSE loans.Only 30-year, fixed-rate loans are eligible and the home must be the borrower’s primary residence. In Fannie’s case, borrowers who go through MCM would pay lower upfront loan-level price adjustments. Freddie requires that the loans go through Home Possible. Analysts with FBR Capital Markets said the government-sponsored enterprises’ ...

The FHA’s accounting of receivables from settled legal claims and partial claim notes is so sloppy that the exact amount collected might be difficult to gauge, according to an internal audit of the agency’s FY 2014 and 2013 financial statements. Conducted by the Department of Housing and Urban Development’s Inspector General, the audit concluded that the FHA had booked receivables from seven cash settlements totaling $1.2 billion in FY 2014 but collected only $466.4 million of those settlements. In addition, during fiscal 2014, as part of its loss mitigation efforts to bring delinquent loans current, the FHA paid $4.4 billion to lenders for partial claims but never received the required promissory notes from the lenders for $1.5 billion of the claim payments. FHA rules require lenders to provide the agency with promissory notes for the payments made or ...

Reports that the Senate Appropriations Committee might include a proposed FHA administrative fee in the Senate’s spending bill for financial and housing agencies is causing a furor within the mortgage financing industry. Industry groups have come out in force, urging the leaders of the Senate committee to remove the provision from a continuing resolution to fund the government beyond Dec. 11. There is speculation that the House might go along with the fee. The provision, expected to raise $30 million for FHA quality assurance efforts, would allow the Department of Housing and Urban Development to charge a fee of no more than 4 basis points of the original principal balance of all FHA-insured mortgages a lender made in the previous fiscal year. HUD originally made the request in President Obama’s proposed FY 2015 budget. Over industry objections, the Senate later incorporated the ...