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Inside FHA/VA Lending

June 12, 2015

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VA Total Originations Up in 1Q15, Growth Attributed to Awareness

Consumer education and community outreach by lenders have kept VA originations on an upward trend in the first quarter of 2015, according to Inside FHA/VA lenders ended the first quarter with $36.5 billion in total originations, a 5.8 percent increase from the fourth quarter of 2014 and up a whopping 86.0 percent from the same period last year. Purchase loans comprised 61.5 percent of VA loans produced during the quarter while streamlined refinance loans accounted for the rest. Seventeen lenders, including two of the top five VA producers, focused a significant portion of their first-quarter activities on refinancing. The rest either led with their purchase business or had a balanced mixof purchase and refi loans. Top-ranked Freedom Mortgage’s total originations were 90.5 percent refis, which officials attributed to lower interest rates and a robust team of ... [1 chart]. Read More

VA Leads FHA, Private MIs in Refis, PMIs Over Agencies in Purchases

The VA maintained a sizeable lead in first-lien mortgage refinancing over FHA and private mortgage insurers in the first quarter of 2015 but yielded to both in purchase originations during the same period. According to the Inside Mortgage Finance database, mortgage lenders originated approximately $221.0 billion of refi loans in the first quarter, a 51.4 percent increase from a revised fourth-quarter production estimate of $146.0 billion. Of first-quarter mortgages securitized by Fannie Mae, Freddie Mac and Ginnie Mae, refi loans comprised 61.4 percent, up sharply from 37.6 percent for all of 2014. VA streamline refis accounted for $20.4 billion while FHA refis made up $12.2 billion of refis pooled in agency mortgage-backed securities. FHA’s refi production jumped 57.8 percent in the first quarter. On the other hand, refi loans with private MI accounted for $14.2 billion produced during the ... Read More

First Tennessee’s FCA Settlement, Another Notch on FHA/DOJ Belt

First Tennessee Bank’s agreement with federal agencies to pay $212.5 million to resolve allegations of violation of the False Claims Act is the latest proof of the government’s unrelenting pursuit of FHA lenders over underwriting and quality control issues. The settlement once again demonstrates the federal government’s commitment to combat FHA fraud using the FCA to recover taxpayer losses, according to an analysis by Boston law firm Greene LLP. “[The Department of Housing and Urban Development] made a point of saying that this behavior is exactly what led to the financial crisis and housing market downturn,” Greene’s compliance attorneys said. HUD and the Department of Justice have vowed to continue to pursue and hold accountable lenders who put profits ahead of their customers and legal obligations, the attorneys added. According to the DOJ, First Tennessee, a regional bank, admitted ... Read More

Consumer Awareness, Education Fuel Growth in VA Originations

Consumer education is the key to VA’s growing origination volume, according to a top executive of a VA-certified lender. “It has to do more with increased awareness of VA loans and their benefit to veterans,” said Jonathan Schrum, vice president at Commerce Home Mortgage, a VA lender in Huntington Beach, CA. Awareness comes with education, and one can go to any network or cable channel or print publication and see advertisements for loans with a VA guaranty, said Schrum. “There are many veterans and service members out there who don’t know what loan programs are available to them and what they can do,” he observed. “So I think it’s word of mouth, talking about it ourselves and getting the word out there about VA loans as much as we can.” The VA loan is such a specific product that a borrower needs to know what it is – the funding, fees, percentages for disabled vets – they need to ... Read More

VA to Propose New Requirements For Appraisers, Finalize QM Rule

The Department of Veterans Affairs expects to issue a final rule establishing ability-to-repay (ATR) standards and defining a “qualified mortgage” in October, according to the agency’s regulatory agenda for the second half of 2015. Proposed in May 2014, the rule would implement provisions of the Dodd-Frank Act, which, among other things, would require the VA to define the types of loans that are QMs under the new ATR provisions of the Truth in Lending Act. VA loans that are designated as QM would have either safe-harbor protections or the presumption that the borrower is able to repay the mortgage loan, in accordance with the new ATR provisions. The final rule would not change VA’s regulations or policies regarding mortgage originations, except when lenders want to originate QMs, the VA said. A VA spokesman clarified that action dates on any particular rulemaking are not ... Read More

FHA’s Rule Calendar Shows Final Seller Concession Rule in June

The FHA is planning to propose a number of rules for the single-family mortgage insurance program through the second half of 2015 and is expecting to act soon on a long-anticipated rule on seller concessions. In its semiannual regulatory agenda, the FHA appears poised to take final action this month on a five-year-old proposed rule seeking to lower FHA seller concessions or contributions toward a buyer’s closing cost. The proposed rule is one of three FHA initiatives to help restore the FHA’s Mutual Mortgage Insurance Fund, which was severely depleted during the housing crisis. Similar to what was proposed in the President’s FY 2012 budget, the proposed rule would limit concessions to 3 percent or $6,000, whichever is greater. The proposal would limit acceptable use of concessions to borrower closing costs, prepaid items, discount points, FHA upfront insurance premium and ... Read More

HECM Production Rises in 1Q15, HMBS Issuance Going Strong

Total originations of reverse mortgages with FHA insurance increased in the first three months of 2015, according to an Inside FHA/VA Lending analysis of agency data. Home Equity Conversion Mortgage production, overall, rose 3.0 percent to $3.9 billion from the fourth quarter of 2014 and was down 2.0 percent on a year-over-year basis. HECM purchase loans far outpaced refinances, which accounted for only 14.5 percent of total HECM volume in the first quarter. Lenders reported a total of $2.3 billion in initial HECM principal amount at loan origination. Meanwhile, there is continued investor interest in HECM mortgage-backed securities (HMBS), according to Ginnie Mae. The unpaid principal balance of HMBS climbed to $48.9 billion in FY 2014 and the number of participations (the funded portions of HECM loans that have been securitized) has increased to 6,585, 856. HMBS issuance was ... [1 chart] Read More

HECM Lenders Seek Clarity on Reverse Mortgage Advertisements

The National Reverse Mortgage Lenders Association is seeking guidance from the Consumer Financial Protection Bureau on how to design reverse mortgage advertisements without triggering regulatory scrutiny. Peter Bell, NRMLA president and chief executive, said he had sent a Freedom of Information Act request seeking access to the particular ads that the CFPB sought comment on in a recent study on reverse mortgage advertisements. The study found that consumers who viewed the ads were left with misimpressions about reverse mortgages. For example, consumers were confused about reverse mortgages being loans. Some thought that home-equity conversion mortgages are a “government benefit” or that they could ensure that homeowners could stay in their homes for the rest of their lives. Others complained of difficulty reading the fine print and that ... Read More

FHA to Propose New Condo Policy To Ensure Compliance with HERA

The FHA plans to issue a proposed rule in the fall that would allow it to insure single-family condominium units in multifamily projects, according to the agency’s regulatory agenda for the second half of 2015. The proposed rule would cover condo units that are attached, detached, semi-detached or manufactured. It would apply as well to undivided interests in the common areas and facilities that serve the project. The proposed change would clarify and ensure lender compliance with the Housing and Economic Recovery Act of 2008. HERA moved FHA’s authority to insure single-family condominiums from Section 234 to Section 203 of the National Housing Act. However, because Section 203 does not provide the same authority for FHA, rulemaking became necessary. HERA also granted FHA the authority to issue administrative notices to convey condominium policy guidance until a ... Read More

Around the Industry

Deadline Extended for Submission of Due-and-Payable Request. On April 23, the FHA issued guidance to reverse-mortgage servicers on the types of loss mitigation options they may provide when a Home Equity Conversion Mortgage loan goes into default. If the default occurred before April 23, 2015, the guidance’s publication date, servicers have 180 days to submit a due-and-payable request if the borrower is unable to pay property charges and goes into default. Under the revised guidance, FHA is allowing a one-time extension through Oct. 20, 2015, for lender-servicers to submit the due-and-payable request. The FHA said the extension would ensure that the April 23 guidance is successfully implemented. Lenders Get First Look at FHAC Improvements. The FHA is providing an overview of the FHA Connection (FHAC) system enhancements to help lenders get ready before the ... Read More

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