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Volume 10 - Number 19

September 15, 2017

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Ginnie Mae to Take Action Against Illicit Refinancing of VA Mortgages

Rapid, aggressive refinancing of VA loans has made a comeback with some issuers using strategies to mask the practice and avoid possible penalties, including expulsion from the Ginnie Mae program, according to a top agency official. Responding to concerns raised by Sen. Elizabeth Warren, D-MA, Michael Bright, acting Ginnie Mae president and chief operations officer, said a joint Ginnie Mae/VA lender-abuse task force is analyzing monthly data and developing additional policy measures to deal with the problem. Bright confirmed the resurgence of inappropriate streamline refinancing in Ginnie securitization pools in recent weeks and has promised to crack down on the questionable practice. The problem surfaced last year when Ginnie Mae noticed unusually fast prepayment speeds in its mortgage-backed securities, particularly MBS backed by VA loans. Ginnie found that certain lenders and ...

Trump Nominates Industry Veteran To Be the Next FHA Commissioner

The White House this week officially nominated industry veteran Brian Montgomery to be the next FHA commissioner and assistant secretary for the Department of Housing and Urban Development. In a related development, the Senate on Thursday confirmed the nomination of Pamela Pantenaude as HUD deputy secretary, three months to the day the Senate Committee on Banking, Housing and Urban Affairs approved her nomination. Montgomery, currently vice chairman of the Washington-based business-consulting firm The Collingwood Group, is no stranger to the job. He previously served as FHA commissioner/HUD assistant secretary during the second Bush administration and as acting HUD secretary in January 2009. As FHA commissioner, Montgomery lead legislative efforts to preserve the nation’s affordable rental housing stock while reducing rental-assistance costs and the cost of ...

MBA Offers Measures to Deal With VA Appraisal Issues, Delays

The Mortgage Bankers Association has recommended steps to address the VA appraiser shortage and increased appraisal turn times. The industry group made its recommendations in a recent letter to Jeffrey London, executive director of the Department of Veterans Affairs’ Loan Guaranty Service, based on a roundtable discussion between MBA and other industry stakeholders in March. Stakeholders expressed their concern for the lack of VA appraisers and longer waiting periods for appraisal reports. Appraiser shortage is an ongoing problem for the VA, and has resulted in delayed loan closings, particularly in highly rural areas. Some states, like Oregon, have very few appraisers, the MBA pointed out. “This delay may force veterans to choose other loan programs to meet certain deadlines or face other adverse outcomes,” the MBA letter warned. On the other hand, the ...

Lenders Seeking to Maintain Profit Margins Boost HECM Production

Reverse mortgage originations with FHA insurance increased both on quarterly and year-over-year bases as lenders, led by nonbanks, moved into the Home Equity Conversion Mortgage market to boost their bottom lines. HECM originations were up 5.5 percent from the first to the second quarter, closing out the first six months with $9.3 billion in total originations. Production was up 25.8 percent at the halfway mark compared to last year. Purchase loans comprised approximately 82.9 percent of HECM volume during the first half of the year. Adjustable-rate HECMs remained the preferred reverse-mortgage product for the majority of borrowers. Despite increased originations, FHA data show HECM production in gradual decline since endorsements peaked at $114.7 billion in FY 2009. The top five HECM producers in the first quarter continued to hold on to their spots. American Advisors Group maintained its rank as ... [Charts]

VA Finalizes Rule for Establishing Fees, Charges for Vendee Financing

The Department of Veterans Affairs has announced a final rule that will allow it to establish reasonable fees to cover the costs of originating and servicing a VA-backed vendee loan. A vendee loan enables a borrower to purchase a VA real estate-owned property. Vendee financing is not a veteran benefit but is available to any purchaser, including veterans and servicemembers. In addition, vendee financing is available for non-owner and owner-occupied residential properties. An owner-occupied purchase can be financed with as little as zero percent downpayment while a non-owner-occupied purchase requires a minimum 5 percent downpayment. In addition, for non-owner-occupied purchases, investors may use 75 percent of anticipated rent, based on an appraiser’s estimate, to offset the subject property monthly payment. Furthermore, investors must have experience in ...

USDA Securitization Up in 2Q17, Chase Regains Previous Ranking

Ginnie Mae securitization of single-family mortgages backed by rural housing loans with the U.S. Department of Agriculture guarantee rose in the second quarter of 2017 and on a year-over-year basis. Issuance of securitized USDA loans increased 9.0 percent from the previous quarter and was up 17.1 percent halfway through 2017 compared to first six months last year. Securitized rural housing loans accounted for $5.0 billion of total Ginnie MBS issuance in the second quarter and $9.5 billion of Ginnie MBS issued during the first six months of 2017. Freedom Mortgage led the market with $1.8 billion. Although down 1.4 percent from the first quarter, Freedom reported a whopping tenfold increase for the first six months from the same period last year. PennyMac maintained its second-place ranking with $1.4 billion, up significantly on a quarterly and year-over-year basis, while Wells Fargo, in third place, closed out the first half with $673.8 million in USDA-backed MBS. Chase Home Finance climbed ... [Chart]

Legal Experts Suggest Five ‘Fixes’ To Avoid Unfounded FCA Claims

Compliance attorneys are calling for legislative changes to prevent possible misuse of the False Claims Act that could result in settlements that could be financially devastating to mortgage lenders. Concerns about possible government misuse of FCA provisions are evident in the statutory qualifiers that are already embedded in the existing statute, according to a recent analysis by Krista Cooley and Laurence Platt, attorneys and partners in the Washington, DC, office of Mayer Brown. The qualifiers are in the main provision of the FCA that the Department of Justice has used against mortgage lenders and servicers, the attorneys said. The provision imposes liability on any person who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” or “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or ...

FHA Announces Changes to HECM Counseling Certificates

The FHA will provide lenders that originate Home Equity Conversion Mortgage loans the option to view and print unsigned HECM counseling certificates in FHA Connection starting Sept. 18, 2017. While the lender may still take the initial loan application, the lender can only begin to process it once the counseling is complete, as evidenced by a completed HECM counseling certificate that contains signatures of both the counselor and borrower. Lenders that chose to use this option will be required to establish procedures to obtain and document authorization from the HECM borrower to access the counseling certificate in FHA Connection. In addition, lenders must certify that a borrower authorization to view the counseling certificate was obtained. Lenders must follow the guidance on processing HECM loans contained in the HUD Handbook, the FHA said. To access HECM counseling certificates, lenders will ...

Around the Industry

DOL’s Overtime Rule Dead – For Now. A federal district court in Texas recently struck down an Obama administration proposal that would have made millions of people eligible for overtime pay. Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas on Aug. 31 invalidated the DOL’s pending overtime regulations, which would have raised the salary threshold exemptions under the Fair Labor Standards Act. The Obama administration finalized the proposed regulations in May last year but was unable to implement them after Mazzant granted a request for injunction filed by the Plano Chamber of Commerce and 55 other business groups last November. The business entities opposed the proposed rule, which would have raised the minimum salary threshold necessary to qualify for the FLSA’s overtime exemption. The salary threshold would have increased from ...

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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