Citadel Loan Servicing, Irvine, CA, one of the most active nonprime residential lenders in the market, is on track to fund a company-record $400 million worth of mortgages this year, more than double what it produced last year. In a brief interview with Inside Nonconforming Markets this week, company founder and CEO Dan Perl said his goal for next year is $1 billion – all in loans that do not meet the qualified-mortgage standard. If the privately held Citadel – Perl is the chief shareholder – can hit...

The market is there – in nonprime and non-QM lending – the question is figuring out how to do it successfully, according to experts on a panel at the recent annual convention of the Mortgage Bankers Association. Most of the lending that’s fallen outside the qualified-mortgage standard has been to high net-worth individuals, said Matthew Nichols, CEO at Deephaven Mortgage. Most of them have millions in the bank and they’re being served by their bankers, he said, but there are a lot more potential non-QM borrowers who don’t have millions in the bank. Nichols said...

Mortgage bankers have been obsessed with regulation for the past five years, with good reason. Yet there was a sense at this week’s annual convention of the Mortgage Bankers Association that the industry is ready to move on. The natural turning point is that the Consumer Financial Protection Bureau has wrapped up the major pieces of its rulemaking mandates from the Dodd-Frank Act. The new final rule on Home Mortgage Disclosure Act reporting was released late last week, and the widely-dreaded integrated-disclosure requirements went into effect early this month. The so-called TRID still doesn’t sit...

Some observers say the reduction in the annual mortgage insurance premium earlier this year has put the FHA Single Family Mutual Mortgage Insurance Fund on an accelerated path to recovery. Whether that is enough to get the fund back to its statutory 2 percent capital reserve ratio remains to be seen. The FHA is getting stronger faster, said Brian Chappelle, a mortgage industry consultant, in an analysis foreshadowing the FHA’s November actuarial report on the state of the MMIF. Last year’s independent actuary projected FHA’s total loan production in 2015 at $124 billion, but the MIP cut has led to a 60 percent increase in the volume forecast, said Chappelle. In all likelihood, the FHA could be looking at more than $200 billion in total originations this year, he predicted. “When a business lowers its prices, it’s going to make it up in volume,” the consultant noted. “Thus, FHA revenue is going to be ...

The number of VA loans with a deficiency fell in April from March but was up 71.7 percent from the same period a year ago, according to the VA Lender Report Card. The report card includes VA loan reviews and deficiencies by month from April 2014 through April 2015. VA loan originations over the one-year period totaled 563,967, the report showed. Of those loans, 303,149 were purchase loans, 162,447 were streamlined refinances, and 98,371 were cash-out refis. A total of 39,037 loans were reviewed by VA, which comprised about 7.0 percent of total volume. Altogether, 14,793 loans (37.9 percent) had deficiencies. The average deficiency response time was 28.1 days. Of the 1,726 loans the VA examined in April, 613 (35.5 percent) contained deficiencies, down from 1,234 loans (33.7 percent of 3,662 loans reviewed) that were found with flaws in March. The number of deficient loans found in ...

A VA mortgage servicer must immediately schedule an inspection and protect a property securing a VA loan if the property has been left vacant or abandoned by its owners. According to new guidelines issued by the VA, loan servicers must conduct an inspection immediately after becoming aware that the property’s physical condition may be in jeopardy. If local codes require more extensive protection than what VA requires, servicers should adhere to local requirements, the agency said. Failure to protect and preserve the collateral may result in a reduced guaranty claim if the servicer’s failure increased the VA’s liability on the loan. Unless the loan is undergoing loss mitigation, a property inspection is also required before the 60th day of delinquency or before starting foreclosure, whichever is earlier, the VA said. In addition, a property inspection will be required at least once a month after ...

Community banks continue to raise concerns about how regulations are hampering mortgage originations, according to the results of a survey by state regulators. While some community banks have ceased originations, lending data and forward-looking projections suggest that community banks have adapted to the post-crisis regulatory environment. The Federal Reserve and Conference of State Bank Supervisors released a report late last week detailing a survey of 868 banks with $10 billion or less in total assets. Single-family mortgages were named as a primary line of businesses by 69 percent of the surveyed banks in 2015, down from a 75 percent share last year. “Considerable variation in mortgage market conditions was reported...

The CFPB recently issued some final changes to its mortgage rules to help foster responsible lending by small creditors, especially those operating in rural and underserved areas. The new rule, which was proposed in January, aims to increase the number of community banks and credit unions that are able to offer certain types of mortgages in rural and underserved areas. It also gives small creditors time to adjust their business practices to comply with the rules. “The financial crisis was not caused by community banks and credit unions, and our mortgage rules reflect the fact that small institutions play a vital role in many communities,” said CFPB Director Richard Cordray. “These changes will help consumers in rural or underserved areas ...

Was Industry “Foaming at Mouth” Over ATR Liability Much Ado About Nothing? “All this foaming at the mouth about legal liability [on qualified mortgage standards] did not pan out. It was an over-reaction,” CFPB Director Richard Cordray said last week. During a hearing held by the House Financial Services Committee, the director noted that he recently met with the CEOs of the top 40 mortgage companies as part of an event hosted by the Mortgage Bankers Association. Cordray said the CEOs revealed that none of these lenders have faced lawsuits alleging violations of standards for qualified mortgages. One industry veteran later said that Cordray took “the disingenuous position that since no lawsuits have been filed, all the concerns about legal ...

Add loan-originator compensation rules to the list of things hindering the origination of loans that fall outside the qualified-mortgage standard. Bob Magee, chief investment officer at Shellpoint Partners, said many loan officers and brokers are reluctant to work on non-QMs because the loans take more time to originate, often get rejected and yet tend to offer the same compensation as an agency mortgage. “If I have loan officers who are paid on a commission for ...