FHA, VA

Browse articles from all of our Newsletters related to FHA, VA.

December 8, 2017 - Inside FHA/VA Lending

VA’s National Portfolio Servicer Farms Out Work to Third Party

Vendor Resource Management, which the VA hired in June to service its nationwide mortgage portfolio and real estate-owned assets, has subcontracted a significant portion of the servicing to BSI Financial Services. According to VRM, BSI took over the servicing of the VA’s national portfolio beginning Dec. 1, 2017. VRM retained the REO servicing. VRM was first awarded the servicing contract in 2012, and the company initially subcontracted Ditech Financial to service VA’s larger national portfolio. The contract was later amended to facilitate a pilot whereby a portion of VA properties would be managed under the award. A new 10-year contract was awarded subsequently to VRM, which became effective on July 1, 2017. Based in Irving, TX, BSI Financial is a loan subservicer and a provider of technology and outsourcing services to banks and institutional investors in the ...


December 8, 2017 - Inside FHA/VA Lending

Senate Vote on FHA Nominee may Occur Before Yearend, Says Source

The Senate could vote on Brian Montgomery’s nomination as FHA commissioner and assistant secretary for housing before the end of the year. The nomination appears to be on a fast track to get Montgomery, a mortgage industry and FHA veteran, on board at the Department of Housing and Urban Development by early January, according to an industry participant who requested anonymity. Last week, the Senate Committee on Banking, Housing and Urban Affairs voted 18 to 5 to advance Montgomery’s nomination. Twelve Republicans and six Democrats voted in favor of the nominee. Sens. Sherrod Brown, D-OH, and Elizabeth Warren, D-MA, opposed Montgomery’s nomination due to concerns that his work as a private consultant with the mortgage industry might influence his judgment as FHA commissioner. Montgomery, a principal with The Collingwood Group, is no stranger to the job. He served as ...


December 8, 2017 - Inside FHA/VA Lending

VA Originations Swing Back Up in 3Q17, Purchase Loans Fuel Surge

VA posted an 11.6 percent increase in originations in the third quarter, reversing a downward slide that began in early 2017. VA lenders ended the period with $45.5 billion in new originations, up from $40.8 billion in the previous quarter. The nine-month VA volume totaled $129.1 billion with purchase mortgages providing a strong boost. Streamlined refinancing, or Interest Rate Reduction Refinance Loans, accounted for 16.8 percent of VA loans originated and securitized during the nine-month period. The top five VA lenders in sequential order – USAA, Veterans United Home Loans, Quicken Loans, Navy Federal Credit Union and Freedom Mortgage – ended the third quarter with a combined $11.05 billion in originations and a 24.7 percent share of the market. Top-ranked USAA reported a 17.0 percent drop in VA lending in the third quarter from the previous quarter. Over the nine-month period, it racked up ... [charts]


December 8, 2017 - Inside FHA/VA Lending

FHA to Cease Insuring Loans on Properties with PACE Assessments

FHA this week announced it will stop insuring new mortgages on properties encumbered with a Property Assessed Clean Energy (PACE) lien as part of a larger effort to protect borrowers and the FHA mortgage insurance fund. “FHA can no longer tolerate putting taxpayers at risk by allowing [PACE] obligations to be placed ahead of the mortgage itself in the event of a default,” said Housing and Urban Development Secretary Ben Carson. Carson said PACE assessments are potentially dangerous for the Mutual Mortgage Insurance Fund and could adversely affect a borrower’s ability to repay or refinance their mortgage or sell their home. FHA also expressed concern about PACE obligations having seniority over pre-existing FHA loans that are already outstanding. The post-endorsement placement of PACE assessments on an FHA-insured mortgage creates a lack of transparency, making it difficult for ...


December 8, 2017 - Inside FHA/VA Lending

Congress Passes Short-Term Spending Bill, Avoids Shutdown

Congress on Thursday passed a stopgap-spending bill to prevent a potential government shutdown and to give lawmakers time to negotiate crucial issues. The House voted 235-193 to pass the measure. A short time later, the Senate quickly approved it 81-14. The temporary spending bill will keep the government running through Dec. 22. The continuing resolution or CR, that has kept the government open would have expired on Dec. 8. Both the House and Senate are scheduled to adjourn on Dec. 15. Congress will need to pass a final appropriations bill or another continuing resolution to keep the government operating after Dec. 22. Despite differences over tax reform, FY 2018 budget, immigration, health care and other issues, lawmakers do not want a shutdown, mortgage industry sources said. Republicans, in particular, hope to enact their $1.5 trillion tax package by Christmas. On the other hand, ...


December 8, 2017 - Inside FHA/VA Lending

Rising Home Values Lead to Higher Loan Limits for Forwards, HECMs

FHA this week announced a 6.8 percent increase in loan limits nationwide for 2018 with 26 counties seeing increases above the national rate. In high-cost areas, the loan-limit ceiling will rise to $679,650 from $636,150 in 2017, while the floor will increase to $294,515 from $275,665. In addition, the national mortgage limit for Home Equity Conversion Mortgages (HECMs) or reverse mortgages will rise to $679,650 from $636,150. FHA regulations do not allow HECM loan limits to vary by metropolitan statistical area or county. Instead, the single limit applies to all mortgages regardless of where the property is located, the agency explained. In between the floor and the ceiling is a broad band of loan limits for single-family forward mortgage loans set at 115 percent of median house prices. The forward limits vary according to MSA and county. The changes in the loan limits are the result of ... [ Chart ]


December 8, 2017 - Inside FHA/VA Lending

Ginnie Mae Expands Seasoning Requirement for VA Refi Loans

Ginnie Mae has issued expanded guidelines to protect veterans and investors from harmful loan churning and rapid prepayments in mortgage-backed securities. The changes, along with additional measures under consideration by a joint Ginnie Mae/VA refinance task force, are aimed at ensuring continued strength and liquidity of the Ginnie Mae MBS program, said Michael Bright, the agency’s acting president. The latest guidelines expand on an initial measure Ginnie implemented requiring six-months of seasoning of VA loans before they can be refinanced and delivered into Ginnie MBS pools. However, some lenders have found ways around the measure and have continued their questionable lending practices, said Bright during recent testimony before a House Financial Services subcommittee. Churning is both illegal and unethical because it preys on unsuspecting borrowers, who are pressured by ...


December 4, 2017 - Inside the CFPB

CFPB, VA Warn Military Personnel About Deceptive Refi Offers

The CFPB and VA recently issued their first WARNO, or “warning order,” to members of the U.S. armed forces and veterans with VA home loans, urging them to stay on their toes and avoid deceptive mortgage refinance offers. “If you have a VA home loan, then there is a good chance that you have already come into contact with unsolicited offers to refinance your mortgage that appear official and may sound too good to be true,” the two agencies said. Many of these solicitations promise extremely low interest rates, thousands of dollars in cash back, the ability to skip mortgage payments, and no out-of-pocket costs or waiting period. “Don’t be fooled,” the CFPB and VA said. “Before responding to any ...


November 22, 2017 - Inside FHA/VA Lending

Waters’ Proposal to Reinstate Life Of Loan Policy Would Weaken FHA

Congress and the FHA should avoid undertaking policy changes that would further weaken the agency’s ability to cover insurance losses and potentially lead to another taxpayer bailout, according to a recent analysis by The Heritage Foundation. THF analyst John Ligon and Norbert Michel, a research fellow, said FHA policy reforms should ensure that the agency maintains a limited role in the housing finance system. FHA should make way for private capital to enter the market and serve the housing needs of American households, they added. FHA can accomplish such policy goals by lowering its loan limits and adequately pricing insurance for borrower risk, the analysts said. In addition, Congress should ensure that FHA borrowers are required to maintain mortgage insurance over the full life of the loan as required currently by the Department of Housing and Urban Development, said ...


November 22, 2017 - Inside FHA/VA Lending

Ginnie Spots Inconsistent Reports Regarding First Payment Date

Ginnie Mae called on issuers to ensure that the data they submit are accurate following the discovery of erroneous payment reports. The agency said it has noticed discrepancies in the reporting of the first payment date on loan modifications in violation of Ginnie guidelines. Specifically, the first payment date some issuers reported as part of the loan-delivery data did not match the date submitted for the same mortgage loan as part of issuers’ monthly report of pool and loan data. Ginnie blamed the errors either on loans set up incorrectly for servicing or faulty data issuers had reported to the Department of Housing and Urban Development. Guidance issued by Ginnie on Nov. 14 reminded issuers to report the first scheduled payment date of the re-amortized loan when reporting the first payment date for modified mortgages through either the GinnieNET or the Reporting and Feedback System. The date ...


November 22, 2017 - Inside FHA/VA Lending

VA Reports Slight Uptick in Use of Loan Benefit; 56% Still Non-Users

A newly released study by the Department of Veterans Affairs showed a 4.0 increase in the number of veterans who have used a VA mortgage in FY 2016 compared to the previous fiscal year. Also, a recent survey conducted by loanDepot found that 56 percent of veterans who participated did not take advantage of their VA loan benefits. Respondents included 400 targeted active servicemembers, veterans and surviving spouses. Conducted by the National Center for Veterans Analysis and Statics, the VA study focused on veterans who have used at least one of 22 benefits or services provided by the VA during fiscal years 2007 through 2016. The study found that loan guarantee was the third most used benefit by veterans behind health care and pensions. Of the 7.1 million vets who used at least one VA benefit, 2.6 million (36.6 percent) took advantage of the zero-downpayment, low-interest ...


November 22, 2017 - Inside FHA/VA Lending

Ex-FHA Chief Suggests Raising FHA Capital Ratio, Other Reforms

A former FHA commissioner has recommended raising the agency’s capital reserve ratio to 3 percent, to make FHA stronger and more resilient. Carol Galante, who served two years as FHA commissioner and assistant secretary for housing in the second term of the Obama administration, laid out her proposal along with other recommendations in a paper that she co-authored. Housing-finance reform without a retooled FHA could threaten families’ access to homeownership and increase risk to taxpayers, contrary to the goals of reform, said Galante, currently the faculty director of the Terner Center for Housing Innovation at University of California Berkeley. In her paper, Mission Critical: Retooling FHA to Meet America’s Housing Needs, Galante spelled out the changes necessary to help FHA perform its complementary and countercyclical role in the nation’s housing markets. Galante called for ...


November 22, 2017 - Inside FHA/VA Lending

Alert Out on Unwanted Refi Offers; CFPB, VA Warn of Misleading Ads

The Department of Veterans Affairs and the Consumer Financial Protection Bureau have issued a joint warning to servicemembers and veterans about VA refinancing offers that sound too good to be true. There is a good chance that borrowers with a VA loan have already received unsolicited offers to refinance their mortgages even just months after closing, the agencies said in their first “warning order” (WARNO). Many of these refi solicitations promise extremely low rates, thousands of dollars in cash back, skipped mortgage payments, no out-of-pocket costs and no waiting period, the agencies noted. The VA and the CFPB said lenders offering VA refinances may use aggressive and potentially misleading advertising and sales tactics. “Lenders may advertise a rate just to get you to respond or you may receive a VA mortgage refi offer that provides limited benefit to you while adding thousands of dollars to your loan balance,” the agencies warned. Even though the VA prohibits a lender from advertising skip payments on ...


November 22, 2017 - Inside FHA/VA Lending

Prospect of FHA MIP Reduction Fades as MMIF Cap Ratio Drops

Any chance of a mortgage-insurance premium reduction in the near future has dimmed in the wake of an actuarial report placing the FHA insurance fund on shakier ground at the end of FY 2017. One clear thing from the report released on Nov. 15 was that FHA’s flagship single-family home mortgage program continued to grow stronger with an economic net worth of $38.4 billion in fiscal 2017. In contrast, problems persisted in the Home Equity Conversion Mortgage portfolio, driving the program’s economic value down by another $6 billion to negative $14.5 billion. The drag HECM losses inflicted on the MMIF has renewed calls to separate the ailing portfolio from the fund, which can only be accomplished by legislation. Right now, the reverse mortgage issue is not even on Congress’ legislative agenda. HECM losses also caused the fund’s economic net worth and capital reserve ratio to decline in fiscal year ...


November 22, 2017 - Inside FHA/VA Lending

FHA Endorsements Rise in 3Q17, Nonbanks Remain Dominant

FHA single-family endorsements rose 2.0 percent in the third quarter from the prior quarter as more borrowers took out purchase loans and nonbanks remained in control of the market during the period. The FHA endorsed $62.1 billion of forward mortgages during the third quarter, which brought total production over the first nine months of 2017 to $182.7 billion (excluding reverse mortgages), a 2.5 percent decline from 2016. Fixed-rate loans continued to comprise nearly all of FHA’s business. Adjustable-rate endorsements totaled $935.3 million for the first nine months of 2017, up from $701.7 million a year ago. FHA purchase activity was up 4.4 percent to $48.5 billion in the third quarter while annual volume increased 2.6 percent from 2016. Purchase loans accounted for 73.6 percent of total FHA endorsements for the nine-month period. Of the $182.7 billion of FHA loans endorsed during the ... [Charts]


November 17, 2017 - Inside MBS & ABS

Analysts Say FHA’s Tangible Benefit Test Might Be the Solution to VA’s Churning Problem

The Ginnie Mae/Veterans Affairs task force is meeting regularly to find a solution to the VA churning problem that is triggering rapid prepayments to the detriment of MBS investors – and a test currently used by the FHA might provide the answer.


November 10, 2017 - Inside FHA/VA Lending

MBA Chief Calls for ‘Targeted’ FHA Reforms to Broaden Credit Access

Targeted reform of the FHA housing program, not broad structural changes, can potentially improve borrowers’ access to credit while clarifying the rules for lenders and protecting taxpayers, a top industry executive told Congress earlier this month. Testifying before the House Financial Services Subcommittee on Housing and Insurance, David Stevens, president and CEO of the Mortgage Bankers Association, said FHA reforms do not entail changes to the program’s scope, such as FHA market share or its customer base. Stevens noted that first time or low- to moderate-income borrowers are typical FHA borrowers. “The structure and coverage of FHA insurance has served borrowers and lenders well,” he said. “It should not be reduced or otherwise altered.” The Mutual Mortgage Insurance Fund capital ratios and thresholds are likewise appropriate, though options to improve the fund’s long-term solvency should ...


November 10, 2017 - Inside FHA/VA Lending

MBA Calls for Changes to LRS, Remedies for Lender Complaints

FHA lenders think the new Loan Review System is a “modern and streamlined system” that is less user-friendly than Neighborhood Watch, according to the Mortgage Bankers Association. In a letter to the Department of Housing and Urban Development, the MBA called on the FHA to continue its ongoing discussion with lenders and other industry stakeholders on how the improve the LRS and its response timelines. Implemented last May, the LRS is an electronic platform for monitoring and reviewing the quality of single-family mortgages that FHA has insured. It replaced the post-endorsement technical review performed by the FHA Connection/Underwriting Review System (URS), review functions for post-closing test cases submitted by direct endorsement lenders, and lender self-reporting functions in Neighborhood Watch. The LRS also includes a defect taxonomy, which features a list of ...


November 10, 2017 - Inside FHA/VA Lending

Stakeholders Warn of Tax Bill’s Ill Effects, Call for Several Changes

Industry stakeholders are calling for changes to some of the mortgage- and housing-related provisions in the House Republicans’ proposed tax reform bill. On Nov. 9, 2017, the House Ways and Means Committee passed H.R. 1, the Tax Cuts and Jobs Act, retaining provisions that may significantly reduce homeownership tax incentives. At the same time, Senate Republicans unveiled their tax reform package, which limits the mortgage interest deduction, eliminates state and local tax deductions and nearly doubles the standard deduction, among other provisions. The Mortgage Bankers Association, National Association of Realtors and the National Association of Home Builders each had a list of concerns but were uniformly opposed to proposed changes to the mortgage-interest deduction. Among other things, the bill would cap the mortgage-interest deduction (MID) at $500,000 for new ...


November 10, 2017 - Inside FHA/VA Lending

Will Net Tangible Benefit Test Stop Churning? Yes, Analysts Say

A new net tangible benefit test for ensuring that a VA borrower benefits from a refinancing appears to be the obvious solution to the VA’s churning problem, according to analysts at Bank of America Merrill Lynch (BAML). Modeled after the FHA net tangible benefit test, the test seems to be a “foregone conclusion” for VA, analysts said. A Ginnie Mae/VA task force is currently working to resolve the problem, which is causing rapid prepayments in Ginnie mortgage-backed securities and raising serious doubts as to whether aggressive refinancing truly benefits veterans and servicemembers. “There is a critical need to ensure that veteran borrowers are not harmed by repeated refinancings through VA’s Interest Rate Reduction Refinance Loan program,” said Mortgage Bankers Association President/CEO David Stevens during a recent appearance before the House Financial Services Committee. IRRRLs, also referred to ...


November 10, 2017 - Inside FHA/VA Lending

Analysts Expect Positive Actuarial Results for FHA Insurance Fund

Analysts are predicting continued positive results in the forthcoming actuarial report to Congress on the status of the FHA Mutual Mortgage Insurance Fund. The FY 2017 annual report is expected to show stable FHA financials, which could prompt renewed industry calls for a cut to the annual mortgage insurance premium, according to a Bank of America Merrill Lynch analysis. Rising home prices and loan-to-value curing are likely to suppress forecasted losses in the MMIF’s single-family forward portfolio, enabling the fund to stay above its mandated 2.0 percent capital reserve ratio, analysts said. However, the BAML analysts see a “low likelihood of an actual cut in MIPs.” Although Department of Housing and UrbanDevelopment Secretary Ben Carson said he would study MIP reduction once a new FHA commissioner is confirmed, the Trump administration is less likely to ...


November 10, 2017 - Inside FHA/VA Lending

Correspondent Platforms Feast on FHA, VA Securitization Market

Correspondent-based lending operations are accounting for a growing share of the FHA and VA home loans pooled in Ginnie Mae mortgage-backed securities, according to a new analysis and ranking by Inside FHA/VA Lending. In fact, correspondent originations are the only production channel to see year-over-year growth in FHA and VA business through the first nine months of 2017. Retail and wholesale-broker production is down for both FHA and VA loans. Correspondent programs are most dominant in the FHA market, perhaps reflecting a preference among large producers to have recourse to a primary-market lender if the government later finds defects in how the loan was originated. Correspondents accounted for 48.7 percent of FHA loans pooled in Ginnie MBS during the first nine months of the year, up from 43.1 percent in all of 2016. Volume was up 1.7 percent from the ... [Charts]


November 9, 2017 - Inside Mortgage Finance

FHA Market Share Drifting Lower as Private MIs And VA Post Bigger Gains During Third Quarter

Private mortgage insurers remained busy during the third quarter of 2017, but the VA loan guar-anty sector saw the biggest growth in primary MI business, a new Inside Mortgage Finance ranking and analysis reveals.


Poll

With originations expected to drop in 2018, will your shop turn to non-QM/non-prime mortgage products as a way to bolster volumes?

Yes, definitely. We’re planning a launch.
No. It’s still difficult compliance/regulatory-wise.
Maybe. It’s under consideration.
Not now. But things could change as 2018 progresses.

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