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Inside FHA/VA Lending

September 7, 2018

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GNMA MBS Issuance Nudges Higher in August, Trails 2017

Ginnie Mae issuers produced $36.68 billion of new single-family mortgage-backed securities last month, a modest 5.0 percent gain from July, according to a new Inside FHA/VA Lending analysis and ranking. Through the first eight months of the year, Ginnie issuance was down 11.0 percent from the same period in 2017. The MBS figures do not include FHA home-equity conversion mortgages, and loan amounts are truncated to the lowest $1,000. Purchase mortgages accounted for 75.6 percent of new issuance in August, although volume was up just 1.9 percent from July’s level. On a year-to-date basis, the purchase-mortgage share rose from 65.7 percent in 2017 to 70.0 percent for the first eight months of this year. Total volume, however, was down 5.1 percent. The refinance market has been more wobbly. As of the end of August, refi volume totaled $65.87 billion, down 26.2 percent from the ... [Chart] Read More

Revised GSE Reform Legislation Strengthens GNMA’s Market Role

House Financial Services Committee Chairman Jeb Hensarling, R-TX, unveiled long-awaited legislation on government-sponsored enterprise reform that would enhance Ginnie Mae’s role in the secondary mortgage market. Hensarling referred to the bill – the Bipartisan Housing Reform Act of 2018 – as a “bipartisan compromise housing-reform plan” that preserves the government guarantee in the secondary mortgage market. The chairman collaborated with Rep. John Delaney, D-MD, in crafting the bill, which calls for the repeal of the federal charters of Fannie Mae and Freddie Mac. The bill would shift the secondary market to a system that allows pooling of qualified conventional mortgages backed by government-approved private guarantors with regulated capital. These loans could be pooled in mortgage-backed securities with explicit government guarantees provided by Ginnie. The new MBS program would be ... Read More

RHS Proposes Various Changes to Loss-Claims, Loss Mit Processes

The Rural Housing Service of the U.S. Department of Agriculture has proposed changes to its single-family housing guaranteed loan program to help certain lenders navigate the loss-claim process. Specifically, the RHS proposes to streamline the loss-claim process for lenders that have acquired title to property through voluntary liquidation or foreclosure. Under current rules, when a lender acquires title to a real estate-owned property, the RHS requires the lender to submit a plan to maintain and market the property. Any change to the plan must be approved by RHS. RHS also provides the lender two opportunities to file a loss claim on an REO property: When the property sells during the permissible marketing period, or after the period (typically from nine to 12 months) if the REO property does not sell. The agency proposes to make changes to the loss-claim payment process when a lender acquires ... Read More

HECM Lenders Take a Beating in 2Q18 as Originations Plummet

Home Equity Conversion Mortgage originations fell dramatically in the second quarter, raising the possibility of a long reverse-mortgage winter in 2018, according to an Inside FHA/VA Lending analysis of HECM data. HECM production fell a whopping 40.9 percent in the second quarter from the previous period. Total HECM originations stood at $8.6 billion by the six-month mark, down 8.3 percent from the prior year. Traditional HECMs, which exclude purchases and refinances, accounted for 80.5 percent of FHA-insured reverse mortgages originated during the first half of 2018. The amount of funds available at loan origination for the first six months totaled $4.7 billion. Analysts blame the low HECM originations on the new lower Principal Limit Factors (PLFs) for HECMs, which became effective in FY 2018. Under the HECM final rule issued last year by the Department of Housing and Urban Development, principal limits [Chart] Read More

RHS Proposes to Make ‘Income Banding’ Part of Program Rules

The USDA’s Rural Housing Service is proposing to amend regulations implementing its guaranteed single-family home loan program to allow the use of “income banding” in determining the very low- and low-income limits in the guaranteed loan program. The planned rule change is part of a larger package of proposed changes to RHS’s single-family direct and guaranteed loan and grant programs. The proposed revisions were published in the Aug. 31 Federal Register. Among other things, RHS has proposed to revise the definition of low-income to allow for the two-tier income limit structure or “income banding” within the Section 502 single-family guaranteed home loan program. The program provides USDA guarantees to lenders that make mortgage loans to low- and moderate-income borrowers in rural areas who could not qualify for a conventional home loan with private mortgage insurance. It already uses ... Read More

Collection of Post-Payment Interest Gets Wells Fargo Bank in Trouble

A federal district court in San Francisco preliminarily approved a $30 million class-action settlement resolving allegations that Wells Fargo Bank improperly collected post-payment interest on FHA-insured mortgages without notice to the borrowers. The U.S. District Court for the Northern District of California granted preliminary approval of the settlement on Aug. 22. Class members include plaintiff Vana Fowler and other borrowers who had an FHA loan originated between June 1, 1996, and Jan. 20, 2015. Plaintiffs allege that Wells Fargo continued to collect interest on FHA loans they had already fully repaid without sending them proper notice. HUD allows lenders to collect interest if the borrower repays the full principal on his or her FHA loan after the first of the month. This means that banks can still collect interest through the end of the month even though the ... Read More

Deloitte Settles Allegations of Sloppy Audits of TBW Financials

Big Four accounting firm Deloitte has paid $149.5 million to the federal government to settle allegations of misconduct in connection with its role as the independent outside auditor of defunct FHA lender Taylor, Bean & Whitaker. The settlement amount includes $115 million in restitution paid to the Department of Housing and Urban Development on Aug. 13, 2018, according to the HUD inspector general. The rest of the payment went to the Department of Justice, which brought the charges on behalf of the government. Deloitte admitted neither to any liability nor to wrongdoing. TBW was an FHA direct endorsement lender and a Ginnie Mae-approved mortgage-backed securities issuer and servicer. It originated, underwrote, acquired and sold mortgages to Freddie Mac and other investors, which used the loans to support MBS issuance or held them as investments. In its heyday, TBW was one of the ... Read More

Integrated Claims/Conveyance Services Reduce FHA Risks, Costs

The profitability of mortgage servicing is under pressure these days due to factors that keep costs high, but there is a better way to reduce costs and conveyance time, especially for FHA foreclosed loans, according to a white paper from Dimont. Integrated processing of insurance claims and conveyance-related activities can dramatically reduce servicers’ operating costs and penalty risks on FHA and other investor-backed loans, said the Dallas-based technology solution provider. The white paper, “The Power of Integrated Claims & Conveyance Services,” lists factors that could significantly affect a servicer’s profitability, such as low origination volume, declining delinquency rates and other factors, like severe weather patterns. Servicing costs for performing loans peaked in 2015 when the average cost for servicing a single-family loan reached $181 per loan – the highest cost since the ... Read More

Around the Industry

VA Announces Special Relief Following Hurricane Lane. The Department of Veterans Affairs has issued guidance reminding servicers of measures they may use to provide relief to VA borrowers affected by Hurricane Lane. VA Announces Modification Comparison Chart; Development Updates. To provide additional clarification, VA has created a chart summarizing its different modification options. The chart will be available to servicers at https://www.benefits.va.gov/ HOMELOANS/servicers_valeri_guides.asp on Monday, Sept. 10, 2018. Also, VALERI Manifest 18.3 will be released on Sept. 8. VALERI will be unavailable from 7 p.m. EST to 11 p.m. EST. The following system enhancements will be included: CQ 13433 – Updates the redemption expiration date business rule logic in the Transfer of Custody event to pass if loan is terminated via deed in lieu; and CQ 13535 – Updates the ... Read More

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