Performance among borrowers with higher loan-to-value ratios has continued to weaken relative to higher-credit-quality auto loan borrowers, and loss severity has increased.
Delinquencies initially rose when FHA implemented changes to its loss-mitigation waterfall in October, installing trial payment plans that keep delinquent loans pooled for three months, generally, before the servicer can buy the loan out for a modification.
The amount of FHA loans removed from Ginnie Mae securities for loss-mitigation purposes more than doubled from the first to the second quarter. Overall, repurchases from the Ginnie program declined slightly. (Includes two data charts.)
FHA serious delinquencies have spiked in recent quarters because of a reporting change implemented under a new loss-mitigation regime, but improving early-stage delinquencies could foreshadow the start of normalization.
The agency recently issued a draft policy that would allow servicers to structure FHA partial claims similarly to other servicing advances rather than as a subordinate note.
The 21st Century ROAD to Housing Act includes some initiatives meant to enhance FHA’s multifamily program, which has seen reduced usage since the pandemic.
The Mortgage Bankers Association said VA lenders currently have to rely on a patchwork of mortgage-related guidance scattered across circulars in addition to the Lenders Handbook.
The trade group said the planned relocation raises doubts about whether sufficient Rural Housing Service staff will stay on to implement the delegated underwriting authority pilot program.