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Volume 11 - Number 5

March 9, 2018

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Ginnie Mae Explores Risk Sharing Between FHA, Private Capital

Ginnie Mae is considering a risk-sharing pilot that would have private capital absorb some of the potential losses on FHA loans securitized through the agency. In remarks at the Structured Finance Industry Group conference in Las Vegas recently, Michael Bright, executive vice president and chief operating officer with Ginnie, said no decision has been made on any credit-enhancement structure, as consultations with stakeholders are still ongoing. “We are actively looking at structures we can put in place where we bring in private capital to provide a [partial] guarantee,” explained Bright, Ginnie’s acting president. “The FHA is going be involved in a lot of them.” A risk-share partnership between FHA and private credit enhancers not only would protect the Mutual Mortgage Insurance Fund but reduce taxpayer risk as well, observers said. The risk-sharing concept would have private mortgage insurers assuming ...

GNMA Mulls Changes to MSR Pacts To Improve Liquidity of Nonbanks

Ginnie Mae is considering changes to the existing pledge agreement that allows mortgage-backed securities issuers to borrow against servicing rights. Revising the acknowledgement agreement between Ginnie, issuers and third-party creditors would ensure that nonbank participants would have sufficient liquidity to make timely payments to investors, said Michael Bright, executive vice president and chief financial officer of Ginnie Mae. In remarks at the recent Structured Finance Industry Group conference in Las Vegas, Bright said the change aims to strengthen Ginnie’s ability to oversee its issuer base, which has shifted from large regulated banks to mostly unregulated nonbanks. Nonbanks filled the void after a contingent of large banks exited the FHA market due to concern about the government’s use of the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act in ...

Private MI Accounts for Bigger Chunk of Primary MI Market in 4Q

Private MIs seized a bigger share of the market in 2017, even as VA rebounded strongly in the fourth quarter, an Inside Mortgage Finance analysis of the primary MI market found. Private MIs wrote $69.9 billion in new flow business in the fourth quarter, down 9.7 percent from the previous quarter. Private MI business accounted for 39.2 percent of total primary MI written in the quarter while FHA lost ground after business dropped 10.9 percent, leaving it with a reduced 33.3 percent market share for the period. After having a stellar year in 2016, VA lending eased to 24.1 percent of the primary MI market last year – still its third-best year since the financial crisis. The tiger in VA’s tank was refinance, which accounted for 44.1 percent of the agency’s lending, compared to just 9.8 percent of private ...

FHA, VA Deliveries into Ginnie Pools Down in 2017; CA Leads All States

The volume of FHA and VA loans securitized in Ginnie Mae pools in 2017 declined from the previous year, according to an analysis of agency data. FHA loans delivered into Ginnie mortgage-backed securities last year totaled $250.5 billion, down 8.7 percent from 2016. Purchase loans comprised 69.6 percent of Ginnie MBS issuances backed by FHA loans over the 12- month period, while refinances accounted for 24.8 percent. FHA borrowers had an average FICO score of 675.3, suggesting a more traditional borrower base of first-time homebuyers and borrowers with credit issues. The FHA loans that were securitized had an average loan-to-value ratio of 92.8 percent and a debt-to-income ratio of 41.3 percent. California led all states in FHA mortgage securitization, with $39.0 billion for all of last year. FHA originations, however, dropped 16.6 percent year-over-year. The other top states in terms of ... [ charts ]

HUD, FDIC Announce Auctions of Reverse Loans; HECM RMBS Rated

The Department of Housing and Urban Development and the Federal Deposit Insurance Corp. have announced offerings of multiple residential reverse mortgage pools for sale to investors. The HUD pools are comprised of approximately 650 reverse mortgage notes with a total loan balance of about $136 million. The sale consists of due and payable first-lien reverse mortgages secured by single-family, vacant residential properties where all borrowers are deceased and none is survived by a non-borrowing spouse. The reverse-mortgage sale is the third offering of its type. As with past offerings, the sale will be by competitive bidding on April 11, 2018. The loans will be sold without FHA insurance and with servicing released. The loans are expected to be offered in regional pools. Meanwhile, the FDIC will unload in open auction 3,280 FHA-insured reverse-mortgage loans from the ...

Carson Denies Removal of Fair Housing, Inclusiveness Language

Realtors and fair-lending advocates are outraged over reports that Housing and Urban Development Secretary Ben Carson has ordered the removal of language ensuring “inclusiveness and discrimination-free communities” from the department’s mission statement. A spokesperson for HUD denied the report, blaming it on faulty reporting by the Huffington Post on March 6. Carson later followed up with his own denial in an open letter to HUD employees, which the department made public. The initial press report cited a March 5 memo written by Amy Thompson, assistant secretary for public affairs, and addressed to HUD political staff. In the memo, Thompson talked about ongoing efforts to update the mission statement to align HUD’s mission with the Trump administration’s priorities. She added that Carson helped in the development of the new statement as well as urged senior staff to ...

Failed TBW’s Audit Firm Agrees to Settle False Claims Act Allegations

Accounting firm Deloitte & Touche has agreed to pay the federal government $149.5 million to settle False Claims Act liabilities arising from its audits of failed FHA lender Taylor, Bean &Whitaker Mortgage Corp. Deloitte was TBW’s independent outside auditor from 2002 through 2008, when the subprime mortgage market unraveled, triggering a financial and housing crisis. The Department of Justice alleged that, during the period in question, TBW had been running a fraudulent scheme involving the purported sale of fictitious or double-pledged mortgages. According to court documents, Lee Bentley Farkas, former chairman of TBW, and six other banking executives engaged in a more than $2.9 billion fraud scheme that contributed to the failures of Colonial Bank and TBW. Farkas and his crew allegedly misappropriated in excess of $1.4 billion from Colonial Bank’s warehouse lending division in Orlando, FL, and approximately $1.5 billion from Ocala Funding, a mortgage-lending facility controlled by TBW.

Reverse Market May be Down but There are Still Many Opportunities

The reverse-mortgage industry is in an uncomfortable place in the first quarter of 2018 due to lower volumes, higher costs and lower margins – the same issues that ail the traditional forward-lending business currently, says a new analysis by the Stratmor Group. Applications and counseling requests are down more than expected for this time of the year despite the recent rule changes implemented by the Department of Housing and Urban Development to ensure the long-term viability of the Home Equity Conversion Mortgage program. Stratmor projects HECM volume at $1.6 billion in 2018, down from approximately $2.0 billion in 2017, due mainly to dwindling refinances. “Given the reduction in the interest-rate floor, it is reasonable to expect that gain-on-sale margins will decline, but just how far, who knows,” said Jim Cameron, a senior partner at Stratmor. “The reduction in unit ...

VA Issues Additional Guidance on Hurricane Relief, Other Topics

The Department of Veterans Affairs has issued new guidance on a number of topics, including foreclosure relief in disaster areas, property management and servicing, lender’s payment or credit of veterans’ costs, acceptance of properties, redemption procedures, and reconveyance disputes. VA has extended the moratorium on foreclosures in areas that suffered the brunt of hurricanes Harvey, Maria and Irma from 180 days to 270 days to give more time for distressed homeowners with a VA mortgage to recover their financial footing. VA also extended the rescission date of guidance regarding its reconveyance dispute process and servicer statutory redemption procedures from Jan. 1, 2018, to Oct. 1, 2020. VA issued additional servicing guidance on real estate-owned properties and direct loan portfolio (VA’s national portfolio), which is currently serviced by ...

Issuers Told to Ensure Debit Blocks Do Not Hinder Ginnie Collections

Ginnie Mae this week urged issuers to ensure that electronic protections against unauthorized automated payments from accounts do not impede the agency’s ability to draft funds from issuers’ accounts to pay investors. In a letter to stakeholders, Ginnie cautioned issuers to make certain that the ACH debit blocks they have in place would not hinder the agency from accessing funds in the central principal-and-interest custodial accounts on the 15th and 20th of each month. ACH debit blocks help prevent fraud by barring unauthorized payments from accounts and allowing companies to designate a specific person to post electronic debits to the payee’s account In addition, Ginnie asked issuers to implement a process of checking whether funds have been drawn at 7 a.m. EST on each 15th and 20th day of the month. “It is critical that each issuer also have in place a process for ...

IG Finds HUD’s Nonpayment Orders Curbed Improper Claim Payments

The Department of Housing and Urban Development’s nonpayment orders were effective in preventing payment of improper claims on FHA loans, according to the department’s inspector general. The HUD IG said a review of 17 claims with an active nonpayment order and 10 claims that had no such order show no improper claims that were paid. The IG conducted its audit from October to December 2017, focusing on FHA loans that had a nonpayment order and a claim paid from Jan. 1, 2013, to Aug. 31, 2017. Of the 97 loans identified and targeted by IG auditors, 17 were picked as a non-statistical sample based on whether an inactive nonpayment order was entered on the same date as the active nonpayment order, comments entered for the nonpayment order, and the claim-payment amounts. The IG also picked 65 loans that had a claim paid after an inactive nonpayment order was created with an ...

Around the Industry

Bipartisan Measure to Protect Vets from Loan Churning Added to S.2155. Sen. Mike Crapo, R-ID, with strong support from Democrats, offered a substitute amendment to S.2155 that includes the language of S.2304, the Protecting Veterans from Predatory Lending Act, to protect veterans from abusive refinancing schemes. Sen. Thom Tillis, R-NC, and Sen. Elizabeth Warren, D-MA, introduced S.2304 as a stand-alone bill on Jan. 11, 2018. S.2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, aims to promote economic growth, provide tailored regulatory relief, and enhance consumer protections. S.2155 was introduced on Nov. 16, 2017, and reported out of committee on Dec. 5. It was added March 8 to the Senate’s schedule for consideration. Bill Introduced to Prevent Spread of Reverse-Mortgage Foreclosures in Philadelphia. The Philadelphia City Council is considering ...


What’s your opinion on how Mick Mulvaney has managed the CFPB since he took over three months ago?

He’s done a good job of paring back the agency’s excesses and we’d like to see more.
I hope he totally dismantles the agency and sends those functions back to the agencies hence they came.
Not bad, but he needs to take his time making additional changes.
We’re totally aghast. He’s gone way too far in protecting the rights of companies not consumers!

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