In a nut shell, Wells argues it’s not running a charity (but of course) and that executive compensation is “designed to pay for performance and encourage long-term shareholder value.”
Ginnie Mae this week meted penalties to two of the nine issuers that received warnings from the agency for excessive refinancings of VA mortgages. Bloomberg reported that Ginnie barred NewDay Financial’s and Nations Lending’s from the more lucrative multi-issuer mortgage-backed securities pools, forcing them to issue custom pools. The restrictions became effective immediately. The agency’s action could reduce mortgage interest rates by 50 basis points for FHA and VA loans, which would benefit first-time homebuyers, said Jaret Seiberg, an analyst with Cowen Washington Research Group. On the other hand, the issuers Ginnie limited to issuing custom pools will end up making loans with higher rates, the analyst noted. Ginnie’s action is part of a joint effort with the Department of Veterans Affairs to crack down on loan churning and faster prepayments of VA loans pooled in Ginnie securities. Loan churning ...
Ginnie Mae’s anti-churning efforts have narrowed the spread between Ginnie and Fannie Mae mortgage-backed securities, prompting executives to say things are almost back to normal. In an interview with Inside FHA/VA Lending this week, Michael Bright, executive vice president and chief operating officer at Ginnie Mae, said the market and investors have responded positively to the agency’s efforts to resolve the churning and prepayment problems. “The Ginnie spread has fallen almost half a point and our securities have become more liquid,” he said. “We want to make sure we’re giving investors CPRs (constant prepayment rates) that they can model.” Bright said he cares less about the overall level of prepayment speeds. What he truly cares about is ensuring that when an investor purchases a Ginnie security, the prepay speed is correlated to changes in the interest rates and not the ...
Ginnie Mae’s credit-risk sharing concept is generating a lot of excitement among private credit enhancers, according to the company’s acting president. A planned risk-sharing pilot with FHA scheduled for later this year has the industry on its toes, said Michael Bright, executive vice president and chief operating officer of Ginnie Mae, during an interview this week with Inside FHA/VA Lending. “There is a line out the door of private companies willing to provide and take on credit risk and work with us on transactions where private capital would assume some of the risk,” he said. Ginnie is currently looking at ways to facilitate risk sharing between FHA and a private third party that would assume a first-loss position on a Ginnie security backed by FHA loans. Bright brought up the idea during remarks at the Structured Finance Industry Group conference in Las Vegas in February. He has been fielding calls since from ...
FHA insured approximately $1.9 billion of ineligible mortgage loans made to borrowers with delinquent federal debts or who are subject to federal administrative offset for past-due child support payments, according to the Department of Housing and Urban Development’s inspector general. Approximately 9,500 loans were ineligible because the sources used by lenders to identify ineligible borrowers lacked sufficient information to raise red flags. In addition, FHA failed to guide lenders adequately in reviewing child support payments, the IG said. Federal law prohibits loans, loan guarantees or insurance to delinquent federal debtors, including those with delinquent child support subject to administrative offset, until the delinquency is resolved. Auditors drew a statistical sample of 60 loans from 13,927 FHA-insured loans that closed in 2016 and analyzed data on their related borrowers in the ...
A Department of Housing and Urban Development requirement for a face-to-face meeting has become quite a compliance challenge for lenders seeking mortgage foreclosure, according to legal experts. In Dan-Harry v. PNC Bank, a federal court in Rhode Island concluded that a borrower may bring a claim for damages and other remedies against a lender for failure to conduct a pre-foreclosure face-to-face meeting with the borrower – a requirement for breach of an FHA-insured mortgage. In an analysis of the court’s ruling, attorneys at the Chicago law firm Hinshaw & Culbertson said the decision is significant because the HUD regulation provides no private right of action. In addition, Rhode Island law does not recognize a cause of action for breach of good faith and reasonable diligence in foreclosure, they noted. Nevertheless, the legal experts pointed out that Rhode Island federal courts effectively ...
The U.S. Department of Agriculture has announced proposed changes to the maps the Rural Housing Service uses to determine whether certain areas are eligible for its single-family and multifamily housing programs. RHS reviews the areas it covers every five years to determine which ones would be eligible for USDA home-loan guarantees. The proposed maps are based on RHS’s 2017-2018 review of data collected from the U.S. Bureau of Census 2015 American Community Survey. The ACS provides information about changes in the U.S. population, housing and workforce. The current RHS maps are based on RHS’s 2012-2013 review of the 2010 U.S. Census. The proposed maps will become effective on June 4, 2018. Properties located in areas that have been reclassified from rural to non-rural on the maps’ effective date may qualify for RHS’ housing programs if they meet certain conditions. First, the ...
Lenders would be more willing to offer non-qualified mortgages if federal regulators established a “regulatory sandbox,” according to the Mortgage Bankers Association. David Stevens, president and CEO of the MBA, made the suggestion in a letter to the Treasury Department last week. He described the concept as a space where businesses can test innovative products and processes without risk of regulatory consequences from noncompliance. Stevens said a sandbox would be ...
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