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Inside FHA/VA Lending

October 30, 2015

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VA, FHA Late Payments Rise In 3Q, 30-,60-Day Delinquencies Increase

The overall delinquency rates for VA and FHA mortgage loans rose in the third quarter of 2015 due to increases in both 30-60 and 60-90 day delinquencies, according to agency data. Approximately 96.5 percent of VA loans in Ginnie Mae mortgage-backed securities remained current in the third quarter, down slightly from the second quarter, suggesting more borrowers have become past due during the period. VA 30-day and 60-day delinquencies rose to 2.44 percent and 0.23 percent, respectively, while the percentage of VA loans 90 days or more past due fell to 0.84 percent. The remaining principal balance of securitized VA loans was $426.8 billion, up 5.1 percent from the prior quarter. Meanwhile, the share of FHA loans in Ginnie Mae pools that were current dropped to 93.8 percent in the third quarter from 94.2 percent in the prior quarter. FHA 30-day delinquencies increased to ... [ 1 chart ] Read More

Servicing of VA Collateral Rising as Wells Fargo Continued to Dominate

The unpaid principal balance on VA loans securitized in 3Q15 Ginnie Mae mortgage-backed securities totaled $426.9 billion, up 5.1 percent from the previous quarter and 17.3 percent more year-over-year. Wells Fargo serviced $114.4 billion of VA collateral at Sept. 30, 2.0 percent up from the prior quarter. It was good enough for a commanding 26.8 percent of the market. The only other megabank among the top five servicers in this segment was fifth-place Chase Home Finance, which closed the quarter with $16.8 billion and a 3.9 percent market share. It saw portfolio declines on both quarterly and year-over-year bases. USAA Federal Savings Bank, in third place, accounted for $24.1 billion, or 5.6 percent of the VA-backed MBS servicing market. Nonbanks PennyMac, in second place, and fourth-ranked Freedom Mortgage combined for 11.0 percent of the ... [ 1 chart ] Read More

GNMA Reports Gain in Servicing Securitized FHA Mortgage Loans

Servicing of FHA loans pooled into Ginnie Mae mortgage-backed securities rose 2.1 percent in the third quarter of 2015. Three megabanks in the top five-servicer tier accounted for a significant share of the market. Ginnie Mae servicers of FHA collateral reported $969.0 billion outstanding at Sept. 30, with Wells Fargo accounting for 27.9 percent of total servicing volume. Wells Fargo, Chase Home Finance (#2) and Bank of America (#5) combined to service 39.3 percent of FHA outstanding as of the end of the quarter. PennyMac Corp. closed the quarter with a $57.7 billion FHA servicing portfolio, good enough for third place and 6.0 percent of the market. Fourth-ranked NationStar Mortgage reported a $53.6 billion servicing portfolio at the end of the ... [ 1 chart ] Read More

Lawmakers Call on HUD to Ease Rules to Boost Flagging Market

A bipartisan group of lawmakers is clamoring for reform of existing FHA condo rules, saying that temporary guidance issued by the Department of Housing and Urban Development in 2012 has failed to boost the condominium market. In a letter to HUD Secretary Julian Castro, 69 House members called for policy changes that would relax FHA restrictions to facilitate the purchase and sale of condominiums. Condos are the most affordable homeownership option for first-time homebuyers, small urban families and elderly Americans, the letter pointed out. “The FHA certification process can be daunting, especially for smaller properties and those without professional management,” it stated. “It takes significant time and resources to collect the required information and provide the necessary paperwork to become certified, and this must be done every two years.” Lapsed condo certifications are also a problem because ... Read More

Lenders Call for Further MIP Cut, Analysts Say Reduction Unlikely

Community lenders renewed their call for a further cut in FHA mortgage insurance premiums amid speculation that a healthier FHA insurance fund could lead to another reduction. But analysts are less optimistic about another premium reduction for different reasons. In a letter to FHA Acting Commissioner Edward Golding, the Community Home Lenders Association asked that the annual MIP be reduced to the pre-crisis level of 0.55 percent when FHA’s capital reserve ratio returns to the statutory 2.0 percent level. The call comes less than a month before FHA issues its highly anticipated annual actuarial report on the state of the Mutual Mortgage Insurance Fund. There is speculation within the mortgage industry that the FY 2015 report will show improved FHA fundamentals, bringing the fund closer or over its statutory 2.0 percent capital reserve ratio. The report is expected to highlight the positive results of a ... Read More

Industry Pressure Forces HUD to Drop Proposed Filing Deadlines

Servicers of FHA mortgage loans dodged a regulatory bullet after the Department of Housing and Urban Development withdrew part of a recently proposed rule, which would terminate insurance coverage if an FHA claim were not filed within a certain period. HUD withdrew the provision under heavy pressure from mortgage lenders, servicers and other industry participants, who expressed concern over the punitive penalty for missing prescribed filing deadlines. Published on July 6, 2015, the proposed rule, among other things, would have established a deadline for filing FHA insurance claims to address the problem of delayed claims filing, which put a strain on FHA resources. Late filings were tolerated previously but the problem worsened after the financial crisis when servicers began submitting FHA claims in bunches, causing processing bottlenecks and longer turnaround time for ... Read More

California HFA to Offer VA Loans With 5% Downpayment Assistance

The California Housing Finance Agency is planning to add VA loans to its list of mortgage programs, with an offer of downpayment assistance. Kenneth Giebel, CHFA director of homeownership, said the agency plans to have a VA loan program in place in early 2016 to complement other first-mortgage programs. In addition, the agency is considering adding the U.S. Department of Agriculture’s guaranteed single family home loan program to its current product menu. Currently, the CHFA is working with the California Department of Veterans Affairs (CalVet) in providing home loans to qualified veterans and servicemembers. There are 31 military installations located throughout California, home to nearly 2 million veterans. A CalVet VA loan utilizes a veterans’ or service member’s VA eligibility and provides 100 percent financing. The department also has a Fannie Mae 97 loan-to-value ratio product, which ... Read More

VA, FHA Issue Guidelines to Ensure Lender Compliance with TRID Rule

The Department of Veterans Affairs and the FHA have issued guidelines concerning the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosure (TRID) rule as it relates to VA- and FHA-backed mortgages. The new TRID rule covers loan applications received on or after Oct. 3, 2015. It replaced Truth-in-Lending-Act disclosures and the Department of Housing and Urban Development’s closing (HUD-1) settlement statement. The rule requires that all covered loans be closed using the new closing disclosure. The VA has announced new closing-disclosure guidelines and a new mandatory method for the stacking order of loan files selected for full-loan review. According to the VA, all files selected for full review on or after Oct. 3 may include the HUD-1 statement. The agency is aware that loans will be requested that have the HUD-1 closing document, and that it will perform the full file review with the ... Read More

Trade Group Asks FHA to Remove Uncertainty Over Use of DAPs

A trade association representing large financial institutions has asked the FHA to clarify its policy regarding the use of downpayment assistance programs on home purchases financed with FHA mortgage loans. The differences in the interpretation of the Department of Housing and Urban Development’s inspector general and the FHA of downpayment assistance programs (DAP), especially by state housing finance agencies, has created uncertainty among lenders, according to the Consumer Mortgage Coalition. In a letter to HUD Secretary Julian Castro, the CMC expressed concern that lenders may become unwilling to continue offering loans with assisted financing because of legal uncertainty. “This would be unfortunate for moderate-income borrowers nationwide, and it would unnecessarily limit the ability of [state housing finance agencies] to function,” the group said. SHFAs do not rely on taxpayer funding for ... Read More

FHA Establishes POCs to Ensure Payment of Taxes, Other Liens

Direct holders of liens against FHA-insured, single-family properties must submit bills for taxes and other fees to specific points-of-contact (POCs) to avoid unnecessary litigation to enforce a lien, according to a new FHA proposed rule. The proposed rule also provides a process for filing a lawsuit against the FHA if, for some reason, payment is not made to the lien holder. Published in two related Federal Register notices, the rule establishes POCs for lienholders, tax agencies and others for the management and disposition of HUD-acquired single-family properties. The POCs are authorized under the National Housing Act. The first notice (FR-5823-N-01) provides POCs within the Department of Housing and Urban Development for lien holders on FHA-owned properties to ensure they receive timely payment of taxes and liens on such properties and to avoid litigation for nonpayment. In addition, the ... Read More

FHA Extends Due and Payable Timelines for Defaulted HECMs

The FHA has extended the period during which servicers must identify delinquent Home Equity Conversion Mortgage loans that have become due and payable or against which an initial legal action has been taken because they are no longer curable. In April, the FHA issued guidance that granted mortgagees 180 days, or until Oct. 23, 2015, to review their portfolios and bring defaulted HECM loans into compliance with the mandatory foreclosure timelines. On Oct. 16, the agency extended the timelines through Jan. 18, 2016. The initial guidance laid out loss mitigation options that HECM servicers may provide when property charges are not paid in accordance with the terms of the HECM loan. HECM loans that are subject to a repayment plan may continue as long as they remain current, said the FHA. Otherwise, lender/servicers must follow the requirements in the April guidance. The loss mitigation options are not available ... Read More

Policy, Procedures for Conveying Property to VA in Florida Clarified

The Department of Veterans Affairs has issued guidance clarifying certain procedures when conveying a property to the agency in Florida. Overall, it is necessary to provide proper documentation when conveying a property to VA. This usually involves providing an owner’s title insurance policy with no exclusions, other than for taxes that have not been billed but may be accrued against the property. In 2008, Florida amended its condominium and planned unit development (PUDs) laws to allow homeowner associations (HOAs) to collect unpaid dues and assessments. The purpose of the legislative change was to make current owners jointly liable with the past owner for the full amount of past-due HOA dues and assessments, unless the HOA was named in the foreclosure complaint at the time it was filed. However, if the HOA is properly named in the foreclosure, a current owner’s limited liability could be less. In order to ... Read More

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