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Volume 11 - Number 10

May 18, 2018

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FHA, VA Lending Down Sharply in 1Q18 But Programs Diverged

New FHA endorsements and VA home loan guaranty volume were both down significantly in the first quarter, but the two programs followed different paths to mostly similar results. A new Inside FHA/VA Lending ranking and analysis shows that endorsements of FHA forward mortgages slipped 10.5 percent from the fourth quarter to $48.96 billion. That was the lowest quarterly output for the program since early 2015, when just $39.48 billion of FHA forward loans were originated. In the VA program, new loan guarantees fell 11.1 percent from the fourth quarter to $39.06 billion. That was the lowest three-month total since the first lap in 2016, with $37.09 billion produced. Most of the decline in FHA business was in purchase-mortgage lending, which fell 13.5 percent from the fourth quarter. While purchase loans still accounted for a hefty 71.1 percent of FHA forward endorsements during the ... [Charts]

HUD Asks Stakeholders to Weigh Disparate-Impact Regulation

A recent announcement by the Department of Housing and Urban Development to seek public comment on its 2013 disparate-impact rule is an opportunity for both HUD and the industry to clarify the liability issues it raises, said compliance experts. On May 10, HUD announced it would formally seek public input on whether the disparate-impact regulation is in tune with the Supreme Court of the United States’ 2015 decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. The HUD rule affirmed the use of disparate impact to establish liability for violations of the Fair Housing Act. It lays out a three-step approach to determining FHAct liability. The first step requires the plaintiff to demonstrate that a practice or a policy has a discriminatory effect on a protected class of persons. According to the rule, liability may be established even if the ...

Bright Nominated to Head GNMA, Montgomery Nomination on Hold

President Trump this week announced Michael Bright as his choice to lead Ginnie Mae, an agency under the Department of Housing and Urban Development, even as Senate Democrats continued to delay vote on his nominee for FHA commissioner. Bright is currently Ginnie Mae’s executive vice president and chief operating officer, though he has been serving as acting president since Theodore Tozer stepped down on Jan. 20, 2017. Tozer served as Ginnie president under the Obama administration for nearly seven years. Bright joined Ginnie on July 11, 2017. Previously, he served as director for financial markets at the Milken Institute and as senior vice president of BlackRock/PennyMac. During his time with Milken, Bright co-authored a paper with Ed DeMarco, former acting director of the Federal Housing Finance Agency and currently president of the Financial Services Roundtable, which proposed to ...

FHA/VA Loan Denial Rates Track Historical Patterns, Data Show

Minority borrowers applying for an FHA or VA first-lien purchase mortgage were more likely to be denied than comparable white borrowers, according to an Inside FHA/VA Lending analysis of 2017 Home Mortgage Disclosure Act data. This finding was no surprise because the denial rates reflected the same historical trends for white and minority borrowers over the years. Approximately 727,865 FHA/VA loans went to white borrowers last year. Of the 978,981 government-insured loan applications submitted by white borrowers, 9.07 percent were denied. Of the 231,108 black borrowers who applied for a government-backed home loan, lenders rejected 14.57 percent. Out of the 285,707 FHA/VA loan applications submitted by Hispanics, lenders denied 11.42 percent. Asian borrowers submitted the least number of FHA/VA loan applications, 44,739. Lenders denied 11.36 percent. For FHA, the ... [Chart]

CHLA Asks FHFA to Look into Unfair Private MI Pricing, Discount Perks

Community mortgage lenders called for an investigation of pricing practices of private mortgage insurers regarding their use of volume discounts and other incentives to get more business from lenders selling loans to Fannie Mae and Freddie Mac. In a letter to Federal Housing Finance Agency Director Mel Watt, the Community Home Lenders Association raised concerns about “pricing disparities” in lender-paid mortgage insurance based on lender size and volume. Such practices may involve better pricing offers to larger lenders or bidding out loan pools based on the percentage of discounts larger lenders get from their customary private MI pricing, the CHLA said. In addition, some private MIs offer special pricing to lenders that agree to do business exclusively with them – a type of proxy for volume discount. The group asked the FHFA, as the regulator of Fannie and Freddie, to investigate whether ...

FHA Extends Foreclosure Timelines For HECM-Backed Disaster Homes

FHA extended foreclosure timelines for properties with a Home Equity Conversion Mortgage loan in hurricane-stricken areas in Puerto Rico and the U.S. Virgin Islands. The 90-day extension aims to prevent further losses to the Mutual Mortgage Insurance Fund. The foreclosure timelines were extended through Aug. 16, 2018, for HECM-backed properties located in areas ravaged by Hurricane Maria. Specifically, the extension applies to 78 affected municipalities in Puerto Rico, as well as HECM-backed properties on the islands of St. Croix, St. John and St. Thomas. In a report to Congress last year, Ginnie Mae reported that, as of Sept. 30, 2017, its aggregate hurricane exposure to its mortgage-backed securities portfolio was approximately $166.9 billion from Hurricanes Harvey, Irma and Maria. Ginnie’s exposure specific to Hurricane Maria totaled $13.7 billion, which is 1.24 percent of all ...

Caliber Home Loans Issues New Term Note Backed by MSRs, ESS

Caliber Home Loans has announced the pricing of a $325 million term-note offering secured by Ginnie Mae mortgage servicing rights and excess servicing spread. The structure is the first Ginnie MSR-backed issuance with a subordinate class, which provides Caliber access to additional financing for MSR portfolio growth not previously available within the industry. Ginnie Mae, which cleared the proposed funding and liquidity strategy, said the subordinate structure is a first for a Ginnie servicing debt financing by an agency-approved servicer. The secondary market agency must review and approve all financing agreements based on Ginnie servicing rights, and their overall structures prior to their issuance, said an agency spokesman. Two other servicers, PennyMac and loanDepot, have issued debt backed by servicing rights. Their structures, however, did not include a subordinate piece. “We recognize this ...

CT VA Lender Launches Training Program for Real Estate Agents

Military Direct Mortgage has announced a new training program to help educate real estate agents about the VA loan as well as the advantages of working with veteran borrowers. The program is called “Operation Welcome Home” and aims to connect home-purchase borrowers with real estate agents, who understand veterans’ specific needs and are versed in the VA loan process, said Patti White, president of the Avon, CT-based company. Many real estate agents have little or no knowledge of the VA loan and loan process, which makes the product the least of their priorities, said White. “For example, my husband has been retired from the service for 44 years and we have gone through refinancing,” she noted. “Yet no one has asked us if either of us had served in the military.” There is also a misconception about the VA loan –too much paperwork, restrictive rules and takes longer to close. “I just think there’s ...

Around the Industry

Freddie Mac Introduces New 3 Percent Down Program. Freddie Mac has announced another 3 percent downpayment option for first-time homebuyers. The program is called HomeOne. HomeOne is the second of its kind. The government-sponsored enterprise currently has another 3 percent down conventional mortgage program in place called Home Possible. Home Possible offers the low downpayment option to low- and moderate-income borrowers. Freddie also announced that it is capping Home Possible’s income limits at 100 percent area of median income for properties in designated high-cost areas, designated disaster areas and minority census tracts in order to focus the product on low-to-mod income borrowers. On the other hand, HomeOne is different because it has no geographic or income restrictions on those seeking the 3 percent down option. It may not be used for ...

Poll

On average, how much of a commission does your shop pay loan officers per loan they originate ?

25 to 50 basis points.
51 to 100 basis points.
101 to 150 basis points.
North of 151 basis points. (We expect a lot.)
We pay salary, not commission.

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