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Inside FHA/VA Lending

May 6, 2016

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Correspondent Channel Plays Huge Role in 1Q FHA Purchase Lending

Retail loan originations account for most new VA lending, but the correspondent channel plays an outsized role in the FHA market, especially in purchase-mortgage lending, according to a new analysis of Ginnie Mae mortgage-backed securities data by Inside FHA/VA Lending. Over half (51.1 percent) of VA loans securitized through Ginnie MBS in the first quarter of 2016 were retail originations, but only 39.1 percent of FHA loans came through that channel. The biggest source of FHA loans was correspondent lenders, which accounted for 45.8 percent of loans securitized during the first three months of this year. That was actually slightly below the 49.2 percent correspondent share of FHA loans back in 2014 and 46.8 percent last year. Correspondents accounted for well over half (53.9 percent) of FHA purchase mortgages during the first quarter, while playing a more ... [ 3 charts ] Read More

Senate Panel Approves FHA IT Funding, Rejects Proposed Fee

Senate appropriators have opted to set aside fiscal 2017 funding for FHA information technology upgrades rather than authorize the agency to charge lenders an administrative fee to pay for improvements. The committee approved the funding as part of its proposed Housing and Urban Development-Transportation budget for FY 2017. Appropriators set aside $13 million in specific funds for FHA IT improvements. HUD proposed that up to $30 million in fees would be charged to lenders on endorsements through Sept. 30, 2019. Collections from such fees would be credited as offsetting collections to the Mutual Mortgage Insurance Fund. Specifically, HUD sought to use the collections to partially offset a requested $160 million funding for improvements to administrative contract support, FHA staffing and information technology. Congress has rejected the ... Read More

Active-Duty Homebuyers Tend to be Younger, Prefer VA Loan Financing

Younger, active-service soldiers are outpacing non-military homebuyers under the age of 35 in home purchase – and they are buying larger, more expensive homes with VA loans, according to a new National Association of Realtors survey. The NAR survey, 2016 Veterans & Active Military Home Buyers and Sellers Profile, found quite a few contrasts between active-service military homebuyers and those who have never served. Of all homebuyers, 18 percent were veterans and 3 percent were in active military service. Of all home sellers, 21 percent were vets and 1 percent were active-military. According to the survey, the typical active-service homebuyer was a lot younger (median age of 34 years old) than non-military buyers (40 years old). The active-military homebuyer was more likely to be married and have several children living in the household. Consequently, they prefer larger single-family homes. Interestingly, the ... Read More

Low Private MI Pricing Could Draw Quality Borrowers Away from FHA

Two studies published this week have found that reduced pricing and declining costs have given conventional mortgages with private mortgage insurance an edge over FHA in the battle for high-quality borrowers. When FHA reduced its annual premium by half a percent for most forward loans 15 months ago, FHA mortgages offered a more affordable payment option for borrowers compared to private MI, according to a new Urban Institute study. FHA’s lower mortgage insurance premium benefited particularly those who could afford a monthly mortgage payment but don’t have the required 20 percent downpayment as well as borrowers with pristine credit, wrote authors Laurie Goodman, director of UI’s Housing Finance Policy Center, and researcher Bing Bai. Until FHA’s 2015 premium cut, private MI was picking up some market share. The FHA price adjustment pushed FHA’s share to ... Read More

USDA Issues Final Rule on Lender Indemnification, Refis, QM Loans

Nearly a month after abruptly withdrawing a final rule for its single-family guaranteed loan program, the U.S. Department of Agriculture’s Rural Housing Service has republished a final rule on lender indemnification, refinancing and qualified mortgage requirements. The changes to the Section 502 Single Family Housing Guaranteed Loan program intend to broaden borrower access to USDA-backed loans and improve the agency’s risk management. Published in the May 3 Federal Register, the final rule expands RHS’ lender indemnification authority for loss claims in cases of fraud or misrepresentation or noncompliance with USDA loan origination. This action continues the agency’s efforts to broaden and improve its ability to manage risk related to its guaranteed home mortgage lending. In addition, the USDA is amending its refinancing provisions to require that the new interest rate not exceed the ... Read More

USDA Announces Significantly Reduced FY 2017 Loan Fees

The U.S. Department of Agriculture’s Rural Housing Service has announced forthcoming guaranty fee reductions for its Section 502 Single Family Housing Guaranteed Loan Program. For FY 2017, RHS will lower the upfront guaranty fee to 1.0 percent from 2.75 percent of the loan amount. The annual fee will change from 0.50 percent to 0.35 percent of the unpaid principal balance. The fee changes will apply to both purchase and refinance transactions. The new fees will be effective on Oct. 1, 2016. The Mortgage Bankers Association welcomed the changes, saying they “represent a major step in making rural housing more affordable for borrowers.” The upfront guaranty fee was increased previously from 2.00 percent in October 2015. The annual had remained at 0.50 percent since October 2014, the ... Read More

VA Orders Special Forbearance for Borrowers in Flood Disaster Areas

The Department of Veterans Affairs has called upon holders of VA-guaranteed single-family mortgage loans to extend forbearance to distressed homeowners affected by the severe storms and flooding in Louisiana and Texas. In recent guidance, the VA described measures VA lenders may employ to provide relief to disaster-stricken homeowners. The agency recommended careful counseling to see whether borrower difficulties are related to the storms or have been the result of other events. If appropriate, prepayments may be reapplied to cure or prevent a borrower default. Servicers also may consider loan modification without VA’s prior approval if certain regulatory conditions are met. Although the holder of the loan is ultimately responsible for determining when to initiate foreclosure or complete termination action, the VA has requested a 90-day freeze on ... Read More

CRC Urges HUD to Order a Freeze On Servicer’s HECM Foreclosures

The California Reinvestment Coalition last week called upon the Department of Housing and Urban Development to impose a moratorium to prevent CIT Group and its servicing subsidiary, Financial Freedom, from initiating any more reverse mortgage foreclosures. The CRC’s request is based in part on data it obtained from HUD indicating an unusually high foreclosure rate for Financial Freedom/CIT Group.According to the data, Financial Freedom’s 39 percent share of reverse mortgage foreclosures since April 2009 is more than two times greater than the company’s estimated market share. The CRC began looking into Financial Freedom’s foreclosure history after receiving complaints from a number of widowed homeowners and other heirs about Freedom’s foreclosure practices, said Kevin Stein, CRC associate director. Stein said the CRC filed a data request under the ... Read More

Around the Industry

Departing FHA Executive. Single Family Deputy Assistant Secretary Kathleen Zadaresky is leaving the FHA for the private sector. Zadaresky is credited for the FHA’s new Single Family Policy Handbook, reform of the Home Equity Conversion Mortgage program, and the single-family loan-quality assessment methodology (Defect Taxonomy). Zadaresky’s deputy, Bob Mulderig, was named as her replacement when she leaves at the end of this month. Mulderig came from the Department of Treasury’s Community Development Financial Institutions Fund, where he recently served as acting manager of the Capital Magnet Program. 95 Year-Old Borrower Files Class-Action Suit Against Reverse Mortgage Lender. The National Consumer Law Center has filed a class-action lawsuit on behalf of a 95-year old plaintiff and other seniors against Dallas-based Nationstar Mortgage, doing business as ... Read More

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