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Volume 10 - Number 21

October 13, 2017

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Ginnie MBS Issuance Rolled To Year’s High Mark in 3Q17

Ginnie Mae issuers rode a wave of purchase-mortgage lending to deliver $120.46 billion of forward mortgages during the third quarter of 2017, the highest three-month volume for the year, according to a new analysis and ranking by Inside FHA/VA Lending. Third-quarter volume was up 9.6 percent from the April-June cycle. The data excluded FHA reverse mortgages and loan amounts are truncated in Ginnie’s mortgage-backed securities disclosures. Without those limitations, total Ginnie MBS issuance rose 9.5 percent to $123.37 billion in the third quarter. Purchase mortgages were the engine behind the growth. Ginnie issuers securitized $85.35 billion of purchase loans in the third quarter, falling just short of the record $85.41 billion set in the third quarter of last year. Although most Ginnie purchase loans (58.7 percent) were FHA loans, the biggest increase was in such loans guaranteed by the ... [Charts]

Carson Open to Excising HECM From Mortgage Insurance Fund

Department of Housing and Urban Development Secretary Ben Carson indicated he is open to the idea of moving the Home Equity Conversion Mortgage program out of the FHA Mutual Mortgage Insurance Fund to stem future losses. Testifying before the House Financial Services Committee this week, Carson said the changes the department has made recently, as well as those currently under consideration, will eliminate most of the program’s problems although residual issues may still linger. Carson acknowledged that the HECM program’s default rate has been a drain on the MMI Fund even though it is much smaller than the FHA’s forward loan portfolio. The recently revised HECM rules issued on Sept. 19 have “stopped the bleeding” in terms of new reverse mortgages, he added. However, separating the HECM portfolio from the FHA insurance fund and making it a stand-alone program is ...

Ginnie Mae, VA Announce Joint Task Force to Stop Improper Refis

Ginnie Mae and the VA this week officially announced a joint-agency task force to deal with the loan-churning problem that is triggering faster prepayments in Ginnie mortgage-backed securities pools. Specifically, the task force will scrutinize aggressive and misleading refinancing offers and address loan churning and repeated refinancings. It will also examine critical issues, data and lender behaviors related to refinancing loans, as well as determine the kind of policy and program changes agencies should make to ensure VA refi loans do not pose an undue risk or burden to vets and taxpayers. Both the VA and Ginnie Mae programs work best when market participants use them to provide a benefit to VA borrowers and, ultimately, lower vet’s costs, officials said. The task force has begun examining data and information to ensure refi loans provide net tangible benefits to veteran-borrowers. In addition, the ...

Ginnie Reveals Nearly 10 Percent Exposure in Disaster Areas

An estimated 9.8 percent of Ginnie Mae’s business may be potentially at risk due to hurricanes Harvey, Irma and Maria, according to data released recently by the agency. The data represent the number of Ginnie loans and their unpaid principal balance amounts in presidentially declared disaster areas in Texas, Florida, Georgia, Puerto Rico and the U.S. Virgin Islands. A total of 1.07 million mortgage loans with an unpaid principal balance of $184.5 billion have been affected. Ginnie Mae’s current mortgage-backed securities portfolio totals $1.9 trillion. The data only refer to the geographic locations of all affected properties underlying loans in Ginnie MBS pools and do not indicate the percentage of those that may have sustained damage during a storm. Hurricane Irma had the highest share of affected loans, 6 percent, while Harvey and Maria accounted for 3 percent and 1 percent, respectively. Irma caused the ...

FHA Eases Occupancy Rule for Properties with H4P Financing

The FHA has updated its guidelines for Home Equity Conversion Mortgage for Purchase (H4P) loans to allow lenders to accept loan applications from borrowers without requiring a certificate of occupancy, as well as prior to completion of HECM counseling. The change follows the Sept. 19 effective date of the HECM final rule, which the Department of Housing and Urban Development released earlier this year. The final rule codifies the many policies that are now in place for originating and servicing reverse mortgages, including H4P requirements. According to the revised guideline, an FHA lender may take an initial HECM loan application either prior to or after the completion of HECM counseling. Also, previously, H4P properties were eligible for FHA insurance only when construction was completed and when the local jurisdiction issued a certificate of occupancy or its equivalent, confirming the ...

HUD Finds IG’s Recommendations On Water Safety Unwarranted

The Department of Housing and Urban Development has requested its inspector general to reconsider certain recommendations intended to toughen safety standards for drinking water in FHA-insured properties. Other lenders or appraisers could interpret imposing stringent requirements on a few FHA lenders wrongly, which could lead to unnecessary water testing simply to avoid future litigation risk, HUD warned in its response to audit findings. HUD disagreed that administrative action is warranted. “Due to potential unintended consequences, [HUD Single Family] does not believe the imposition of sanctions at this time presents a viable alternative,” the department wrote. While making changes to water-safety standards, HUD said it will train lenders and appraisers to ensure compliance with the revised standards. The IG audit came in the wake of a previous audit, which found that ...

HUD Dumps Lender Insight for New Loan Review Summary Report

The Department of Housing and Urban Development is discontinuing its quarterly newsletter, Lender Insight, with the implementation of FHA’s Loan Review System. The change is aimed at improving both FHA’s and lenders’ quality-control and risk-management operations. HUD will be publishing a quarterly Loan Review Summary Report to provide a snapshot of the results of FHA’s quality-control review of mortgage originations over the preceding 12 months. According to HUD, the report will include only underwritten loans that were subject to a post-endorsement technical review. It does not include the results of lenders’ self-reports or any other loans that were reviewed as part of a lender examination, the agency said. The report will show the initial rating of all loans, the updated rating six months from the end of the review period, and a final rating. The “final” rating is subject to change as long as ...

IG Finds HUD Ensured Purchaser Compliance, Needs Improvement

The Department of Housing and Urban Development inspector general praised the agency for ensuring purchasers participating in HUD’s single-family note sales program complied with the terms in their purchase agreements. The inspector general noted, however, the need to improve the requirements in the purchase agreements. The IG found those requirements inadequate due to the lack of formal rules for the note sales program. “If a purchaser chose not to comply with its purchase agreement, HUD lacked assurance that the purchaser would offer homeowners foreclosure avoidance, loan-modification options, and other program requirements,” the IG’s audit report stated. Under the agreement, loan buyers must certify their avoidance of final closure for the required period of time, perform loan modification, and submit quarterly reports on their progress, including results of ...

Around the Industry

OMB Seeks Cancellation of Portion of NFIP Debt. The Trump administration is asking Congress to cancel $16 billion of the National Flood Insurance Program’s current $23 billion debt to the Department of the Treasury so that it can continue providing subsidized flood insurance to mortgagors. The Office of Management and Budget made its request along with several legislative reform proposals in a recent letter to Vice President Michael Pence. The proposed debt cancellation and the reforms aim to place the NFIP on sound financial footing and expand the use of private flood insurance. The NFIP’s debt burden is expected to spike with claims from hurricanes Harvey, Irma and Maria. OMB Director Mick Mulvaney warned that NFIP funding could run out by the end of October, including its $30.4 billion in borrowing authority, and leave the program unable to pay claims. Cancellation of the ...

Poll

The year is almost 75% done. How is mortgage origination volume at your shop?

We will fund about the same as we did in 2016.
We will fund more than last year – by a little.
We will fund more than last year – by a lot.
We will fund less than last year – by a little.
We will fund less than last year – by a lot.

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