The average daily trading volume in agency MBS fell to $180.2 billion in November, hitting a new low for the year, according to the Securities Industry and Financial Markets Association. Such a low reading is indicative of a lack of liquidity in the market, but by now, investment bankers and policy makers are no longer wringing their hands about the number. The complacency, in part, is fueled...

The highway funding bill signed into law last week included a provision that expanded exemptions to standards for qualified mortgages. QMs generally cannot have balloon-payment features, though some small lenders in rural areas have been allowed to originate balloon mortgages that can be classified as QMs. Previously, the QM balloon exemption applied to small lenders that operate predominantly in rural or underserved areas. H.R. 22, the Fixing America’s Surface Transportation Act ...

Compliance issues involving disclosure requirements that took effect in October could be delaying the issuance of jumbo mortgage-backed securities, according to a report this week from Moody’s Investors Service. The rating service said several third-party review firms found compliance violations on more than 90 percent of a sample of 300 mortgages reviewed for compliance with the TILA-RESPA Integrated Disclosure rule. Many of the TRID violations were ... [Includes three briefs]

The national loan limit for FHA-insured single-family mortgages will remain unchanged throughout 2016, but 188 counties will see their high-cost limits rise due to house-price changes. The FHA national loan limit “ceiling” for forward mortgages will remain at $625,500, while the FHA “floor” will stay at $271,050 for next year. For example, San Francisco, Los Angeles, Marin, and Silicon Valley, where the loan limits are currently at $625,500, will see no change in 2016. The same will be true for many counties whose FHA loan limits fall between the national floor and ceiling, like Sacramento and Fresno, for instance. On the other hand, 188 counties like Napa, Riverside, San Bernardino and San Diego will see their forward loan limits increase by at least $1,150 to as much as $30,240. Each year, FHA readjusts its loan limits based on 115 percent of the median house price in the area. The loan-limit floor is set at ...

An estimated $117.1 billion in VA-guaranteed home loans went into Ginnie Mae mortgage-backed security pools during the first nine months of 2015, according to an Inside FHA/VA Lending analysis of agency data. The totals for securitized VA purchase and refinance loans in Ginnie pools were almost even - $57.8 billion and $57.6 billion, respectively. Modified VA loans were also included in the total. The volume of VA-backed Ginnie securitization during the first nine months of 2015 far exceeded the $109.5 billion reported for all of 2014. Lenders attributed the production spike to a growing population of active-duty military personnel and veterans returning from foreign deployment and to better outreach efforts. VA originations accounted for 12.1 percent of loans underlying Fannie Mae, Freddie Mac and Ginnie Mae MBS and 25.2 percent of insured loans in those pools. The securitized VA loans showed an ... [ 1 chart ]

Approximately $191.8 billion in FHA-insured mortgage loans were securitized during the first nine months of 2015, surpassing the $158.1 billion of FHA loans that were placed in Ginnie Mae pools last year, agency loan-level data show. Securitized FHA purchase loans accounted for $111.7 billion of Ginnie Mae mortgage-backed securities issued over the same period. FHA refinance securitization totaled $66.8 billion. Modified FHA loans were also included in Ginnie MBS totals. The FHA loans in Ginnie MBS had an average loan-to-value ratio of 92.9 percent and an average FICO score of 677.5 percent, reflecting the single-family program’s traditional borrower base. The loans had an average debt-to-income ratio of 39.8 percent. FHA loans accounted for 19.8 percent of loans that underlie Fannie Mae, Freddie Mac and Ginnie Mae MBS. On the other hand, the same loans accounted for 41.2 percent of insured loans in ... [ 1 chart ]

The Department of Justice has announced settlements with two nonbank FHA originators to resolve allegations of FHA underwriting fraud and False Claims Act violations. Franklin American Mortgage in Franklin, TN, recently agreed to pay $70 million to resolve allegations it knowingly originated and underwrote FHA-insured loans that did not meet agency guidelines. There were also quality-control issues. According to the DOJ, Franklin Mortgage, a direct endorsement lender, agreed it had certified ineligible loans for FHA insurance starting Jan. 1, 2006, including single-family residential loans, reverse mortgages and streamlined refinances. Those loans later resulted in claims submitted to the Department of Housing and Urban Development, causing losses to the FHA insurance fund. The DOJ also alleged that the nonbank lender employed unqualified junior underwriters and set high quotas for its ...

Quicken Loans’ chief executive officer reiterated threats by company owner Dan Gilbert to exit the FHA business amid concerns about a forthcoming lender-certification rule and an ongoing court battle with the Department of Justice. A report by Reuters quoted Gilbert earlier this week as saying he is considering pulling Quicken Loans out of the FHA market. In an interview with IMFnews, Quicken CEO Bill Emerson said top management would be remiss if it did not think about exiting the business. Quicken will decide whether to stay or go after the FHA releases its revised rule on lender certification later this month, he said. The revised proposal restores a provision initially removed from the original proposal, which would require lenders to certify that neither the firm nor its officers have been suspended, debarred or excluded from participation in any federal agency transactions. In addition, the revised proposed rule requires ...

An Urban Institute analysis echoed observations in the FY 2015 actuarial audit of the FHA Mutual Mortgage Insurance Fund, calling for the separation of the highly volatile reverse mortgage portfolio from the fund. Assessing the performances of the larger forward mortgage portfolio and the smaller Home Equity Conversion Mortgage portfolio when determining FHA’s financial status results in an inaccurate picture, warned Laurie Goodman, director of the institute’s Housing Finance Policy Center. Including the highly unstable, unpredictable HECM business in FHA’s solvency calculation severely distorts the fund’s true financial condition, she said. Goodman’s dire warning puts a damper on the actuarial audit, which, for the first time since 2009, reported the fund’s capital ratio over the 2.0 percent statutory threshold, up from 0.41 percent in FY 2014 and a year earlier than projected in the ...

Customer satisfaction tends to be higher for the VA and FHA single-family mortgage programs than for Fannie Mae and Freddie Mac, according to the J.D. Power 2015 U.S. Primary Mortgage Origination Satisfaction Survey. So-called special mortgage programs, such as FHA and VA, showed a substantial improvement in customer satisfaction in 2015 compared to last year. VA customer satisfaction averaged 818 this year, up from 805 in 2014, while FHA customer satisfaction also averaged 818, an improvement from 794 in 2015, said Craig Martin, director of mortgage practice at J.D. Power. On the other hand, overall customer satisfaction with Fannie Mae- and Freddie Mac-related mortgage originations averaged 793 in 2015, an increase of 7 points from 2014. The annual study measures customer satisfaction with mortgage origination in six areas: application/approval process ...