After losing an appeal against the Federal Housing Finance Agency last year, Nomura Securities has asked the Supreme Court of the United States to hear its case and help overturn an $800 million penalty it owes the FHFA in a settlement. And the Structured Industry Finance Markets Association is helping in that effort. Nomura hopes the high court can determine whether the Housing and Economic Recovery Act’s extension of the statute of limitations applies to statutes of repose. The firm argues that too much time had passed for the FHFA to bring charges.

The Department of Veterans Affairs has drafted a proposed rule to curb predatory loan churning. The draft rule is “well on its way through concurrence with VA and the Office of Management and Budget,” said Jeff London, director of the VA Loan Guaranty Service, during an interview at the agency’s 19t Annual Lender Conference in Miami recently. He did not specify a publication date but said the proposed rule will be published “fairly soon.” Churning, or serial refinancing, involves multiple refinances of the same loan within short periods with no clear benefit to the borrower. In addition, churning triggers rapid prepayments in Ginnie Mae mortgage-backed securities to the detriment of investors and makes it difficult to price MBS appropriately. London declined to provide details about the rule’s content but said veterans and taxpayers would be protected. VA looked at a range of things that were common in the ...

Ginnie Mae is considering a tiered rating system to ensure that all participants in its mortgage securities program have sufficient liquidity and capital to meet their counterparty obligations. The agency is still fleshing out the idea of an “A-tier” issuer, which would likely develop into a policy in the near future, said Michael Bright, executive vice president and chief operating officer, during a recent interview with Inside FHA/VA Lending. “An A-tier issuer would be [a company that] has gone above and beyond in helping put together for us a risk management and liquidity plan that does not rely on liquidity providers, and whose defect and cure rates are low,” he explained. Such issuer/servicers also would be well capitalized. Ginnie is developing the metrics for such a system, as well as incentives for the A-tier issuers, Bright said He added that top-rated firms would be eligible for “concierge services” from the ...

The Department of Veterans Affairs recently withdrew a directive that was part of an early disclosure requirement for Interest Rate Reduction Refinance Loans just days after the measure took effect. Although the early disclosure measure became effective for IRRRLs closed on or after April 1, 2018, VA’ “Frequently Asked Questions” guidance issued on April 5 clarified some of the earlier provisions and removed a new disclosure to address lender concerns. The current VA Lenders Handbook requires a veteran to sign a statement showing he or she understands the effects of the IRRRL and how long it would take to recoup all closing costs. If the veteran’s monthly payment increases by 20 percent or more, the lender must certify that the borrower qualifies for the new monthly payment. The handbook, however, is unclear as to when the statement and lender certification must be delivered. Consequently, some ...

FHA-insured loans accounted for a modest chunk of mortgage-related consumer complaints submitted to the Consumer Financial Protection Bureau last year. According to the CFPB’s annual report on consumer disputes, the bureau received approximately 37,300 mortgage complaints in 2017, 13 percent of which were related to FHA mortgages. Loans with a VA guaranty and FHA-insured reverse mortgages accounted for 4 percent and 2 percent of the complaints, respectively. Conventional home mortgages had the biggest share of mortgage complaints – 48 percent – followed by “other type of mortgage” at 28 percent. Six percent of mortgage complaints were about home-equity loans or home-equity lines of credit. For mortgage complaints, 41 percent involved making payments (such as those involving servicing, escrow accounts and posting of payments), while 37 percent were related to borrowers’ ....

Nomura Securities wants the Supreme Court of the United States to hear its case after losing an appeal in October to overturn an $800 million penalty assessed by the Federal Housing Finance Agency. The firm argues that the high court should determine whether the Housing and Economic Recovery Act’s extension of the statute of limitations applies to statutes of repose.

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 ...

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 ...

More Fannie Mae and Freddie Mac shareholders have initiated lawsuits against the government for the Treasury sweep of the mortgage giants’ profits. Each of the plaintiffs in the three new cases were owners of the GSEs’ junior preferred stock. The cases, Akanthos v. U.S., CSS v. U.S. and Appaloosa v. U.S., have been assigned to Judge Margaret Sweeney, who is also handling other similar complaints. They were filed in the U.S. Court of Federal Claims. According to court documents, Akanthos Opportunity Master Fund owned more than $137 million in junior preferred stock as of Aug. 16, 2016. Akanthos complained of suffering from “severe economic loss” to its holdings.