FHA, VA

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

May 26, 2017 - Inside FHA/VA Lending

Around the Industry

Moody’s Rates Credit Suisse FHA Securitization Transaction. Moody’s assigned investment-grade ratings to Credit Suisse’s first securitization deal in 2017 backed by seasoned re-performing and performing, fully amortizing, fixed- and adjustable-rate mortgages insured by FHA. The deal is the first FHA-insured re-performing transaction since 2010, according to the rating agency. The collateral pool is comprised of 672 first-lien, fixed-rate loans and ARMs with a weighted average updated FICO score of 614 and loan-to-value ratio of 94.2 percent. Approximately 82.4 percent of the loans in the collateral pool were previously modified. Approximately 52.8 percent of the loans have been current for at least 24 months. Another 17.3 percent of the loans have been current for more than 12 months. Comments Sought on Various Information Collection Proposals. The Department of Housing and ...


May 26, 2017 - Inside FHA/VA Lending

VA Clarifies Use of Comparables In Appraisals of Remote Properties

Difficulty coming up with comparable home sales data in rural areas has prompted the Department of Veterans Affairs to clarify its requirements for comparable sales for VA appraisals. The VA lender handbook requires comparable sales in appraisal reports to be located as near as possible to the property. Compliance with the requirement has been particularly difficult for VA lenders in rural and certain urban areas, where properties are a good distance apart. According to VA Circular 26-17-14, VA does not set a minimum or maximum distance between properties for an appraisal but requires that “comparable sales should be located as close to the subject as practical.” In cases where obtaining data is a problem because properties may be many miles from the subject property, appraisers should explain why those comparable sales were used and how they compare and/or compete with the ...


May 26, 2017 - Inside FHA/VA Lending

VA LPOs School Lenders on Lending To Incapacitated Vet Borrowers

Loan processing for incompetent veterans presents significant challenges to VA lenders, requiring strict compliance with special guidance on top of the basic VA underwriting rules. One challenge is dealing with legal appointees who assist and represent veterans in legal transactions, such as applying for a mortgage loan. There are ways to determine whether a veteran is incompetent, said Mark Jamison, loan production officer (LPO) with the VA Cleveland Regional Center, during the VA Lender Conference in Kansas City, MO, last month. The Department of Veterans Affairs or a probate court can deem a veteran incompetent due to severe injury, medical conditions, mental disorders, and financial instability, he said. A mortgage lender could make a determination of incompetency if the initial purchase contract documents were signed by an attorney-in-fact, the veteran divulged the incompetency, or the ...


May 26, 2017 - Inside FHA/VA Lending

VA Explains Certificate of Eligibility Process, Entitlement Restoration

Requesting a certificate of eligibility (COE) may be just a click away but the process is not without pitfalls, cautioned a panel of VA loan production officers during an industry conference. The panelists – Maxine Henry, program analyst with the VA Central Office; Ricardo Holloway, loan production officer with the Atlanta Regional Loan Center; and Paula Jesse, assistant loan production officer with the Denver RLC – urged veterans to order their COE early in the loan-application process to avoid any hiccups. A COE verifies to the lender that the veteran/borrower is eligible for a VA loan. Ordering early would help prevent last-minute delays, said Henry. “It is a problem if the veteran is at the closing table and still does not have a COE because it was ordered just a few days prior to closing,” Henry noted. Other potential hitches are incorrect documentation or receiving a VA determination that the ...


May 26, 2017 - Inside FHA/VA Lending

FCA Action Against Lenders Slows As DOJ’s List of FHA Targets Shrinks

False Claims Act enforcement against FHA lenders appears to have slowed with no new cases being filed by the Department of Justice or referred by the Department of Housing and Urban Development’s inspector general for nearly a year. Neither agency has gone after any lender for alleged False Claims Act violations since May of last year when the Department of Justice intervened in an FCA case brought by a whistleblower against Guild Mortgage, an FHA direct endorsement lender. The complaint alleged that San Diego-based Guild Mortgage knowingly approved loans that violated FHA rules while falsely certifying compliance with those rules. The alleged violations occurred between 2006 and 2011, resulting in “tens of millions of dollars” in losses to HUD. The case is pending in federal district court in Washington, DC. Indications are the FCA cases involving FHA lenders have ...


May 26, 2017 - Inside FHA/VA Lending

Groups Oppose Proposed IT Fee, Suggest Other Funding Sources

The Mortgage Bankers Association is pushing back against a controversial budget proposal to charge FHA lenders a fee to pay for technology upgrades to help protect the Mutual Mortgage Insurance Fund. Rather than charging lenders an “administrative fee,” the MBA prefers that funding improvements to FHA’s aging information systems be done through the appropriations process. “We need to be working with [the Department of Housing and Urban Development] and Congress to find ways to fund technology upgrades and risk-management improvements,” MBA Senior Vice President Pete Mills told Inside FHA/VA Lending. The White House’s budget plan for FY 2018 incorporates verbatim a proposal by the Obama administration to charge FHA lenders an administrative fee to support the upgrades needed to reduce MMI Fund losses. According to the previous administration’s estimate, the ...


May 26, 2017 - Inside FHA/VA Lending

Housing Finance Reform Should Include FHA Lending Reform

The Financial Services Roundtable called for changes to FHA’s legal liability standards to encourage banks to make more FHA loans. Increased risks of False Claims Act enforcement and concerns about multi-million dollar penalties even for the slightest underwriting errors have forced banks to restrict their FHA lending. The top 10 FHA lenders, once dominated by banks, are now nondepository institutions, which accounted for 83 percent of FHA forward originations in the first quarter of 2017. Wells Fargo, once the leader in FHA lending, has dropped to a woeful 20th place in the rankings. “Some federal officials have expressed concern about the capacity of the government to evaluate the qualifications of lenders that are not subject to regulation by federal agencies,” the FSR said. The group also noted the credit overlays many FHA lenders have added to the loans due to ...


May 26, 2017 - Inside FHA/VA Lending

VA Production Drops in 1Q17 as Refinancing Train Loses Steam

VA originations saw a significant drop during the first three months of 2017 as refinancing continued to slow, according to an Inside FHA/VA Lending analysis of agency data. Lenders closed $42.9 billion of VA loans in the first quarter, down 28.1 percent from the previous quarter The numbers show purchase mortgages continued to drive VA originations. A slowdown in VA refinancing appears to be the key factor in the decline. Refis accounted for 27.7 percent of total VA production, down from the fourth quarter of 2016. A change in Ginnie Mae’s pooling rules aimed at discouraging churning has taken much of the steam out of the once-booming VA refi segment. The steep drop in volume ended an upward quarter-to-quarter trend in VA originations last year. Eight of the top 10 VA lenders saw huge quarter-over-quarter declines in their VA lending, with top-ranked Freedom Mortgage posting the largest ... [ Charts ]


May 26, 2017 - Inside FHA/VA Lending

MBA, NAR Identify HUD Rules for Clarification, Revision, Repeal

FHA liability standards, Property Assessed Clean Energy (PACE) lien guidance, downpayment assistance and revised condominium rules are among the regulations industry groups would like the Department of Housing and Urban Development to change or clarify. HUD is putting together an internal task force to identify regulations for review and to assess their compliance costs and regulatory burden. The department also has published a notice of the undertaking in the Federal Register with a request for comment. The comment period ends on June 14, 2017. President Trump issued an executive order in January directing federal agencies to identify at least two prior regulations for elimination for every new regulation they issue. The Mortgage Bankers Association is seeking clarification of FHA liability standards to entice banks to resume their FHA lending. The group thinks HUD’s new defect taxonomy ...


May 25, 2017 - Inside Mortgage Finance

Trump Budget Preserves FHA, Ginnie Mae Funding Levels, Eliminates Key HUD Programs, Calls for CFPB Restructuring

The Trump administration has revived a controversial proposal to tap FHA lenders to help pay for technology upgrades at the Department of Housing and Urban Development. HUD is among nine federal agencies facing significant cuts in their discretionary budgets, al-though guarantee commitments for FHA’s single-family mortgage insurance program and Ginnie Mae mortgage-backed securities programs were kept at their previous fiscal levels, $400 billion and $500 billion, respectively. The White House budget plan incorporates...


May 22, 2017 - Inside the CFPB

Other Compliance News: Financial Freedom to Pay $89M to Settle Reverse Mortgage Charges

Financial Freedom, an Austin, TX-based servicer, agreed to an $89 million settlement with the U.S. Department of Justice to settle allegations that it violated the False Claims Act, the Financial Institutions Reform, Recovery, and Enforcement Act, and FHA servicing requirements in connection with its participation in FHA’s Home Equity Conversion Mortgages, or “reverse mortgage,” program. The Justice Department alleged that Financial Freedom sought to obtain insurance payments for interest from FHA “despite failing to properly disclose on the insurance claim forms it filed with the agency that the mortgagee was not eligible for such interest payments because it had failed to meet various deadlines relating to appraisal of the property, submission of claims to the Department of Housing and Urban ...


May 18, 2017 - Inside Mortgage Finance

Treasury Official Supports Expanded GSE Credit- Risk Transfers, More Mortgage Regulatory Clarity

Craig Phillips, counselor to the Treasury secretary, recently spoke about the importance of credit-risk transfers, the role of private capital in the mortgage market and burdensome regulations. During a credit-risk transfer symposium in New York City earlier this week, he said it’s important to grow participation in the government-sponsored enterprises’ CRT programs. “Every dollar of risk today is a dollar less of taxpayer risk,” said Phillips. “In my view we should continue...


May 18, 2017 - Inside Mortgage Finance

Trump Administration Needs to Press For Multiple Reforms to FHA Lending, FSR Suggests

The Financial Services Roundtable recently called for enacting comprehensive housing finance reform, including reform of the FHA’s single-family mortgage insurance program while focusing the agency’s mission on first-time and low- and moderate-income borrowers. The FSR’s call came in a detailed response to President Trump’s executive order earlier this year directing the Treasury Department to conduct an assessment of financial regulations. For starters, the trade group urged...


May 18, 2017 - Inside Mortgage Finance

Major Product Categories All Saw Big Drops In 1Q17 Originations; GSE Market Pounded

Nonprime products such as subprime and non-qualified mortgage loans held up better than industry mainstays during the sharp drop in origination volume in the first quarter of this year, according to a new Inside Mortgage Finance ranking and analysis. Conventional conforming remained the biggest component of the market, accounting for 53.0 percent of first-lien mortgage originations in the first three months of 2017. But the estimated $204.0 billion of such loans produced during the period was down 36.6 percent from the fourth quarter. Government-insured lending was...[Includes two data tables]


May 12, 2017 - Inside FHA/VA Lending

Around the Industry

New USDA Chief. Former Georgia Governor Sonny Perdue was sworn in as Secretary of Agriculture on April 25, shortly after the Senate confirmed him. At the same time, President Trump signed an executive order creating a task force on growing housing, among other things, as an economic driver in rural communities. Improved Lender Search List Launched. The FHA last week announced an improved lender list-search capability to help the public search for FHA-approved single-family and multifamily lenders. The search engine allows search on a variety of criteria, including lender name, city, state, servicer-originator type, and recent Home Equity Conversion Mortgage or 203(k) rehabilitation mortgage experience. The Department of Housing and Urban Development’s new Lender List Search web page replaces the previous Lender List lookup page on HUD.gov. While search criteria have not ...


May 12, 2017 - Inside FHA/VA Lending

HUD Names Industry Veteran as Senior Advisor to Secretary Carson

The Department of Housing and Urban Development this week announced the appointment of industry executive Adolfo Marzol as senior advisor to HUD Secretary Ben Carson. Prior to his appointment, Marzol was a member of the board of directors of Essent Group, a private mortgage insurance company based in Radnor, PA. He resigned from the board on May 6, 2017. Marzol retired as executive vice president of Essent in 2015. During his long career, he held senior posts at Fannie Mae, including executive vice president and chief credit officer. He left the government-sponsored enterprise in 2004. Prior to his stint with Fannie, Marzol worked at Chase Manhattan Mortgage, which is now a part of JPMorgan Chase. HUD noted that Marzol will advise Carson “on matters related to mortgage finance.” An experienced professional, his expertise lies in housing finance reform. “His knowledge of ...


May 12, 2017 - Inside FHA/VA Lending

Preparations for LRS Intensifies as May 15 Effective Date Approaches

With only days to go before the implementation of its new Loan Review System, the FHA is encouraging lenders to take a few more steps to ensure smooth transition to the new system. The LRS will go live on May 15, 2017, as the new electronic platform for FHA’s Title II single-family, quality-control processes. Lenders will use the LRS to interact with FHA during post-endorsement loan reviews, direct endorsement authority test cases, lender monitoring reviews and lender self-reporting of fraud and other material findings. Findings will be communicated through the system’s defect taxonomy, which provides a streamlined method of identifying and capturing information about defects uncovered during individual loan reviews. In its latest guidance, the FHA instructs lenders to check access to FHA Connection for any potential glitches. All users access the LRS through FHA Connection via the ...


May 12, 2017 - Inside FHA/VA Lending

FY 17 Spending Bill Passed, FHA, Ginnie Mae Budgets Unchanged

Appropriation levels for FHA and Ginnie Mae from the previous fiscal year were unchanged in the FY 2017 omnibus spending bill, which President Trump signed into law on May 5. The bill, which passed the House by a 309-118 vote and the Senate by a 79-18 vote on May 4, will fund the federal government through the rest of the fiscal year ending Sept. 30, 2017. Among other things, the bill allocates $400 billion to single-family guarantee commitments under the FHA Mutual Mortgage Insurance Fund, and provides $130 million for administrative contract expenses. In addition, the budget provides an additional $30 million if guaranteed loan commitments exceed $200 billion. The agreement also sets aside up to $30 billion for FHA multifamily and specialized loan guarantees during FY 2017. A total of $55 million was set aside for housing counseling programs, $65.3 million for fair housing activities, and $4 million to ...


May 12, 2017 - Inside FHA/VA Lending

PennyMac Now Allows Equifax’s VOE in Lieu of Tax Transcripts

PennyMac has announced that, effective immediately, for FHA, VA, Fannie Mae and Freddie Mac transactions, lenders may provide Equifax’s The Work Number verification of employment, or a written VOE from an equivalent income-verification company in lieu of tax transcripts for salaried borrowers. The Work Number is a user-paid VOE database acquired by Equifax in February 2007. The written VOE must have full income figures supporting the qualifying income, said PennyMac. For all loans closed on or after June 15, 2017, the 2016 tax transcript will be required, unless the file contains evidence an extension was filed along with a copy of the Internal Revenue Service notice for 2016 showing “no record of return filed.” For all loans closed on or after Dec. 15, 2017, 2016 tax returns and tax transcripts will be required. PennyMac reminded lenders that its underwriting system cannot respond to ...


May 12, 2017 - Inside FHA/VA Lending

VA Instructs Lenders on Completing Streamline Refinance Worksheet

The Department of Veterans Affairs has issued guidance clarifying its requirements for completing the Interest Rate Reduction Refinance Loan Worksheet. The guidance is effective for all IRRRL applications originated on or after July 2, 2017. The VA said it has received many inquiries from lenders regarding the proper completion of IRRRL Worksheet (VA Form 26-8923) since the implementation of the TRID-LE and CD (Truth in Lending Act-Real Estate Settlement Procedures Act Integrated Loan Estimate and Closing Disclosure.) The guidance clarifies and establishes VA policy regarding the following: Amount of the existing allowable loan balance (Line 1); Principal reduction from veteran (Line 2); Maximum allowable discount points (Line 5); Maximum allowable closing costs (Line 8); Maximum allowable closing costs (Line 11); and Maximum loan amount (Line 18). VA said it understands the ...


May 12, 2017 - Inside FHA/VA Lending

VA Clarifies QM Safe Harbor Rules For Streamlined Refinancings

The Department of Veterans Affairs’ interim final rule on qualified mortgages (QM) implements the Dodd-Frank provision requiring creditors to make a reasonable and good faith determination that the borrower has a reasonable ability to repay the loan. The VA interim final rule defines QM to mean any loan that the agency guarantees, insures or originates. However, certain limitations apply to VA’s Interest Rate Reduction Refinance Loans (IRRRLs) in the rule’s guidance for “safe harbor.” Under the safe harbor requirements for an IRRRL, the loan being refinanced must have been originated at least six months before the new loan’s closing, and six payments must have been made. In addition, the veteran should not have been more than 30 days past due during the six months preceding the new loan’s closing. The QM rule’s six-month seasoning requirement, however, inadvertently created an ...


May 12, 2017 - Inside FHA/VA Lending

VA Explains Characteristics of an ‘Egregious Loan,’ Discusses Cases

What is an “egregious” VA mortgage loan? Panelists at last month’s VA Lending Conference in Kansas City, MO, helped shed light on such loans by describing them as flawed and in violation of VA requirements. “But there’s more,” said Greg Nelms, VA chief of loan policy. Unstable income and use of active-duty income when that income will be extinguished within one year could taint a VA loan and make it egregious, said Nelms. High debt-to-income ratio, residual income that is below VA requirements and failure to consider a spouse’s debts or credit in a community-property state also could have an adverse effect on a VA loan, he added. The panel presented several “egregious loan” scenarios involving reviews of several mortgages from 2016 in which lenders were required to sign indemnification agreements. The first example consisted of a VA home loan for $102,047, which closed in ...


May 12, 2017 - Inside FHA/VA Lending

Nonbanks Dominate FHA Primary Market; Volume Slowed in 1Q17

Nonbank lenders far out-produced depository institutions in originating FHA mortgages during the first quarter of 2017. A new Inside FHA/VA Lending analysis reveals that nonbank lenders produced over 83 percent of FHA forward loans endorsed during the first quarter. With over 8,000 entities listed as originators and sponsors in FHA loan-level data, the overwhelming majority of them were independent mortgage banks, mortgage brokers and other nonbank lenders. The 14 largest FHA originators were all nonbanks, led by Quicken Loans, Freedom Mortgage and loanDepot. One sign of the overwhelming fragmentation in the FHA primary market is the fact that these three lenders accounted for just 11.3 percent of first-quarter endorsements. The largest depository originator of FHA loans was PrimeLending, an affiliate of PlainsCapital Bank. It ranked 15th in production with a ... [charts ]


May 11, 2017 - Inside Mortgage Finance

Private MIs Lead in Agency Purchase Market, But FHA and VA Are Bigger Players in Refi Sector

Private mortgage insurers were the largest providers of insurance coverage on purchase loans securitized by the three agencies in early 2017, according to a new Inside Mortgage Finance analysis. Private MI coverage was attached to $40.08 billion of purchase mortgages securitized by Fannie Mae and Freddie Mac during the first quarter. That equaled 26.3 percent of total purchase business by the two government-sponsored enterprises and Ginnie Mae. The FHA provided...[Includes one data table]


May 11, 2017 - Inside Mortgage Finance

Private MI Lost Some Ground to FHA In 1Q17, VA Slowed by Refi Change

The primary mortgage-insurance market held up a little better than overall first-lien originations during the first quarter of 2017, and the FHA program appeared to gain ground, according to a new Inside Mortgage Finance ranking and analysis. A total of $165.84 billion of first-lien mortgages produced during the first quarter of this year carried some form of primary MI coverage. That was down 20.6 percent from the fourth quarter, but overall first-lien originations fell by 33.6 percent during that period. The share of new production with MI coverage jumped to 43.1 percent, the highest it’s been since the end of 2008. The key factor for the greater MI penetration was...[Includes three data tables]


April 28, 2017 - Inside FHA/VA Lending

Trump Nominates Former Housing Official Patenaude as HUD DepSec

President Trump Friday morning signaled his intent to nominate former regulator Pamela Patenaude to be the next deputy secretary of the Department of Housing and Urban Development. According to a bio listed on the White House website, Patenaude is president of the J. Ronald Terwilliger Foundation for Housing America’s Families. She also served as HUD assistant secretary for community, planning and development during the George W. Bush administration. Patenaude’ s nomination had been expected for some time. She is expected to play a key role in shaping housing policy in the new administration and brings to the table a depth of knowledge about the industry. HUD Secretary Ben Carson was a career brain surgeon with little in the way of housing and mortgage experience. Meanwhile, industry lobbyists contend the White House continues to vet candidates for two other ...


April 28, 2017 - Inside FHA/VA Lending

Millions of Disabled Vets Unware of VA Home Loan Benefit, Experts Say

Millions of disabled post-9/11 veterans may qualify for a VA-guaranteed home mortgage but the majority are not taking advantage of the program, according to a new report from American Financing. The VA loan is great for injured veterans exiting the military but many are either unaware or uninformed, said Greg Vogel, manager of American Financing in Aurora, CO. Active-duty servicemembers and retired military are entitled to VA housing benefits, including an agency guarantee on their mortgage in lieu of mortgage insurance and no downpayment. A first-time VA borrower pays a 2.15 percent funding fee. Borrowers with a service-connected disability are exempt from paying the fee. “You would expect many of our injured warriors would take advantage of this great loan but that’s not what the numbers indicate,” said Vogel, who left the Army as a disabled vet Tim Byers, a mortgage analyst at ...


April 28, 2017 - Inside FHA/VA Lending

Federal Shutdown or Not, No Major Disruption Anticipated for FHA

As of press time, Congress passed a one-week stopgap spending measure to keep the government open through May 5, averting a looming government shutdown. The House passed H.J. Res. 99 by a vote of 373 to 30. The continuing resolution has been sent to President Trump. The continuing resolution provides lawmakers sufficient time to negotiate an omnibus spending bill. The previous spending bill was scheduled to expire at midnight, April 28, which would have resulted in a government shutdown similar to the one that paralyzed the federal government in 2013. A shutdown can cause grief for sellers and homebuyers and severely delay processing of mortgage loans if lenders cannot verify a borrower’s tax data or Social Security number. This time, however, the FHA and VA are prepared for such an eventuality, said industry observers. A 16-day government shutdown in October 2013 sent millions of ...


April 28, 2017 - Inside FHA/VA Lending

VA Issues New Loss-Mitigation Option to Help Vets Retain Homes

The Department of Veterans Affairs has issued new guidelines and instructions for modifying VA-guaranteed mortgages in lieu of previous guidance regarding the agency’s Home Affordable Modification Program (HAMP). VA has a long-standing policy of encouraging servicers to work with borrowers to explore all reasonable options to help them keep their home or reduce losses through loss mitigation. The agency requires lenders to consider VA-guaranteed loans for a VA Affordable modification (VAAM) when traditional home-retention options are not feasible. A VAAM allows a new monthly, fixed-rate mortgage payment no greater than 31 percent of the borrower’s monthly gross income. It can cover principal, interest, property taxes, insurance and condominium or homeowner association fees The rate must not exceed the most recent Freddie Mac benchmark rate for ...


April 28, 2017 - Inside FHA/VA Lending

Extra Income, Loan Payoff Leading Reasons for Taking Out HECM Loan

The most common motivation for borrowers (and nonborrowers) in opting for a reverse mortgage was “to gain extra income for everyday expenses” and “paying off mortgage debt,” according to an Ohio State University study on reverse mortgage motivations and outcomes. Published in the latest issue of the Department of Housing and Urban Development’s Cityscape: A Journal of Policy Development and Research, the study said both motivations reflect previous findings that reverse mortgage borrowers are likely to be “house rich” and cash poor.” The study used survey information collected as part of the Aging in Place (AIP) study, which looked at borrower motivations for seeking a Home Equity Conversion Mortgage as well as reasons for not getting one. The primary data set consisted of 1,761 senior households that received counseling for a HECM loan between 2006 and 2011 and responded to the ...


April 28, 2017 - Inside FHA/VA Lending

VA Issues Guidance for Recording Fees, Charges on TRID-CD Form

The Department of Veterans Affairs has issued guidance regarding documentation of allowable fees and charges under the Consumer Financial Protection Bureau’s Truth in Lending Act-Real Estate Settlement Procedures Act Integrated Disclosure Closing Disclosure, or TRID-CD form. Under the guidance, VA lenders must document all allowable fees and charges assessed against the borrower as well as any lender and seller credits on the TRID-CD. VA now requires documentation because it no longer accepts a separate, itemized list of credits and charges, as previously allowed with the HUD-1 form. In completing the closing-cost section of the TRID-CD, fees charged to the veteran must be listed in the “Borrower Paid” column. Lender credits should be listed in the “Paid by Others” column, the agency said. Closing costs that are paid for by either the seller or the lender must be placed in either the ...


April 28, 2017 - Inside FHA/VA Lending

VA Seeks Public Input on Ways to Make VA Loans More Competitive

The VA Home Loan Guaranty Service is revisiting agency rules on allowable fees and charges veterans pay to obtain a VA loan for possible changes. VA is seeking comments on a proposed rule that would ease current restrictions to put borrowers in a better position to bargain during negotiations for a home purchase. While the current rule continues to protect veterans from incurring unreasonable closing costs as originally intended, some veterans and their representatives have complained that the restrictions weaken their ability to negotiate with sellers and lenders. Compared with a conventional purchase-loan transaction, sellers and lenders find it more difficult to deal with a borrower with a VA loan because they end up bearing many of the customary fees and charges, the VA explained. “The restrictions on fees and charges puts borrowers at a bargaining disadvantage against ...


April 28, 2017 - Inside FHA/VA Lending

FHA/VA Default Rates Down In Seasonal Shift in Early 2017

Mortgage default rates for FHA and VA loans followed seasonal trends and shifted significantly lower in the first quarter of 2017, according to a new analysis and servicer ranking by Inside FHA/VA Lending. While both portfolios showed strong growth in the dollar volume of loans outstanding in Ginnie Mae mortgage-backed securities, there were also huge declines in the number of loans past due. Some $1.036 trillion of FHA forward mortgages were in Ginnie pools at the end of March, up 1.1 percent from the previous quarter. But delinquency rates for the less-severe categories of late payment were down sharply. The number of FHA loans 30-60 days past due, for example, declined by 28.4 percent, lowering the delinquency rate by 1.51 percentage points, leaving it just about where it was a year ago. The same thing happened in the VA sector. Total VA supply grew 3.2 percent to ... [Charts]


April 27, 2017 - Inside Mortgage Finance

VA Home Loan Guaranty Revisits Fees and Charges, Seeks Comment on Proposed Changes on Closing Costs

The Department of Veterans Affairs is seeking comment on a proposal to ease restrictions on the allowable fees and charges military veterans may pay to obtain a VA home loan – a change that could make VA-backed financing more competitive in home purchases. The VA Loan Guaranty Service wants to hear from stakeholders as to how the agency can protect veterans from incurring excessive closing costs without being overly restrictive. Specifically, the VA is considering ways to revise the list of acceptable fees and charges that are impeding VA borrowers’ ability to compete against bidders using other home-purchase financing options that are not restricted by law or regulation. The VA rule on fees and charges has...


April 27, 2017 - Inside Mortgage Finance

Mortgage Originations Down Sharply in 1Q17 As Virtually All Top Lenders Post Big Declines

Production of new first-lien home mortgages fizzled in the first quarter of 2017 as the bottom fell out of the refinance market and home sales slumbered, according to a new Inside Mortgage Finance ranking and analysis. An estimated $385.0 billion of new first-lien mortgages were originated in the first three months of the year, a 33.6 percent downturn from the fourth quarter of 2016. It likely did not mark the end of the world, however. For starters, the fourth quarter of last year surprised on the upside – at $580.0 billion, it was the second-highest quarterly volume in the previous four years. And the start of 2017 was...[Includes two data tables]


April 21, 2017 - Inside Mortgage Trends

California Tops in Insured Mortgage Business

California remained the mother lode of mortgage insurance business in the first quarter of 2017, but a number of other major states had higher concentrations of insured business, according to a new Inside Mortgage Trends analysis. Some $12.50 billion of agency mortgages securitized during the first quarter with some form of primary MI were tied to Golden State properties, representing 58.9 percent of California’s total agency purchase-mortgage ... [Includes one data chart]


April 21, 2017 - Inside Mortgage Trends

Non-Defaulters Pay More Under FHA Pricing

A disproportionate share of the premiums collected under the FHA’s current pricing scheme are paid by non-defaulters even though higher premiums are targeted for higher-risk borrowers, according to a new analysis from the Federal Reserve Bank of New York. The study contends that FHA’s policy of allowing borrowers to refinance their upfront mortgage insurance premium “reduces the total cost of borrowing during the first year, but results in non-defaulters paying ...


April 21, 2017 - Inside MBS & ABS

GNMA Attributes VA Refi Drop to Anti-Churning Rule As Agency Monitoring of Serial Refinancing Continues

A significant drop in the VA refinance market in the first quarter is proof that Ginnie Mae’s anti-churning policy has been effective in curbing serial refinancing of VA loans, according to agency officials at the recent VA Lenders Conference in Kansas City, MO. A hefty 42.7 percent decline in VA refi volume during the first three months of 2017 reflects an apparently successful effort by Ginnie to stop the practice of refinancing VA loans within six months of closing. By comparison, securitization of VA purchase loans fell 17.3 percent from the fourth quarter. John Getchis, senior vice president at Ginnie, said...


April 20, 2017 - Inside Mortgage Finance

CFPB Suggests Lenders are Making Billions Because Borrowers Don’t Shop Effectively for Mortgages

Many borrowers could have seen significant savings on the interest rate on a mortgage if they shopped around, according to a working paper published by the Consumer Financial Protection Bureau’s Office of Research. The bureau economists noted that close to half of consumers didn’t shop before taking out a mortgage, based on the National Survey of Mortgage Originations, a representative survey conducted by the CFPB and the Federal Housing Finance Agency. And only 16.0 percent of borrowers considered three or more lenders before obtaining a mortgage. The economists said...


April 20, 2017 - Inside Mortgage Finance

VA Says Appraiser Shortage Only in Rural Areas, But NAR Says Problem is Worse than It Seems

The problem with the perceived appraiser shortage is not whether VA has enough appraisers but whether there are enough of them in areas where appraisal demands are greater, according to a ranking member of the VA Fee Panel of the Department of Veterans Affairs. As of April 8, 2017, the Fee Panel had 5,006 licensed and certified appraisers working in the eight regional loan centers (RLC) that administer the VA Home Loan Guaranty program, said Kevin Eason, valuation officer with the Denver RLC. Last year, 553 new appraisers were appointed to the panel, whose members accept VA appraisal assignments on a rotating basis. Speaking last week at the annual VA Lenders Conference in Kansas City, MO, Eason noted...


April 14, 2017 - Inside FHA/VA Lending

Around the Industry

Judgment Imposed on Former President and Founder of Loan Correspondent Firm. A federal court in Chicago ordered the former president and founder of MDR Mortgage of Palatine, IL, to pay more than $10 million to the Department of Housing and Urban Development for submitting false certifications on FHA loans. The HUD Inspector General Office and the Department of Justice withheld the identity of the former bank official, who was found liable under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act. The violations allegedly involved loans the FHA insured from 2006 through August 7, 2008, the period during which MDR submitted the allegedly false certifications. The DOJ identified 237 loans that MDR processed during the period in question. The loans defaulted and resulted in $3.4 million in claims paid by the FHA. In addition, MDR provided annual verifications to ...


April 14, 2017 - Inside FHA/VA Lending

Patenaude for DepHUDSEC? Bright To Replace Tozer at Ginnie Mae?

The Trump White House has yet to fill key positions at the Department of Housing and Urban Development and agencies that fall under the HUD umbrella, including the FHA and Ginnie Mae. According to industry officials who claim to have some knowledge of the process, the administration is seriously considering Pam Patenaude to be the deputy HUD secretary. Patenaude is president of the J. Ronald Terwilliger Foundation for Housing America’s Families. She served as HUD assistant secretary for community, planning and development during the George W. Bush administration. Meanwhile, Michael Bright has been mentioned as a candidate to be the next president of Ginnie Mae. Bright currently serves as director, Center for Financial Markets at the Milken Institute. During his career he has worked for mortgage lender/servicer PennyMac, investment banking firm BlackRock and ...


April 14, 2017 - Inside FHA/VA Lending

Initial Loan Defect Rate Drops in 4Q16, Missing Docs Leading Cause

The initial material defect rate on sampled FHA loans targeted for a post-endorsement technical review was down in the fourth quarter of 2016 from the previous quarter, according to the FHA’s latest quarterly loan review update. FHA’s Lending Insight reports the material defect rate prior to curing fell to 49 percent in 4Q16 from 53 percent in the previous quarter, based on an analysis of 5,267 sampled FHA loans endorsed between Oct. 1, 2016, and Dec. 31, 2016. Of the loans sampled, 75 percent were purchase-money mortgages; 10 percent were streamlined refinances; 7 percent rate and term refinances, and 8 percent, Home Equity Conversion Mortgage loans. Twenty percent of the sample, 1,081 loans, were conforming while 25 percent, or 1,313 loans, were found to be defective. About 13 percent of the loans were denied endorsement. On the other hand, approximately 41 percent of loans ...


April 14, 2017 - Inside FHA/VA Lending

MBA Remarks on Defect Taxonomy, LRS, Changes to Data Collection

The Mortgage Bankers Association is calling for improvements and clarifications of the new Loan Review System and the Defect Taxonomy to provide FHA lenders greater certainty as to the type of errors that can expose them to False Claims Act risk. The LRS unifies FHA quality control processes into a single system, including test cases from post-closing lenders, post-endorsement loan reviews, lender monitoring reviews and lender self-reporting. It streamlines all the review processes and analysis of results. The new system includes the defect taxonomy, a streamlined rating system for documenting loan-review results and finding the root cause of defects. In MBA’s view, the defect taxonomy shows how far FHA has advanced to ensure lender accountability for the quality of their loans, protecting borrowers and managing its financial risks. However, the Department of Housing and Urban Development needs to ...


April 14, 2017 - Inside FHA/VA Lending

GNMA Servicing Market Thawing? Stakeholders Hope as Market Stirs

When it comes to selling Ginnie Mae mortgage servicing rights the past two years, it’s been mostly a bear market, but all that may be changing soon. At least that is what sellers and their merger and acquisition advisors hope. Mark Garland, executive vice president of MountainView Financial Solutions, Denver, said that of late, “We have seen a few Ginnie trades go off at a level closer to full value.” Garland told Inside FHA/VA Lending that he expects this trend to continue with prices tightening over the summer “provided rates hold and [prepayment] speeds stay largely in line with expectations.” And if that happens, there could be an increase in the ability of FHA/VA lenders to securitize excess cash flows. But that’s getting a little ahead of the equation. Over the past 24 months, the Ginnie MSR market has been difficult for two reasons: the fear of lawsuits/sanctions tied to FHA lending, and fast ...


April 14, 2017 - Inside FHA/VA Lending

MRB Reports Settlements, Fines From Administrative Actions

The Mortgage Review Board reported approximately $454.4 million in settlements against 25 FHA lenders for various violations of agency lending requirements and imposed more than $1.8 million fines and other penalties against 253 lenders for annual recertification violations. The settlements and penalties resulted from administrative actions taken by the board against FHA lenders from Oct. 1, 2015, through Sept. 30, 2016. The settlements did not constitute an admission of liability or fault. The largest settlement amount, $113 million, was between Freedom Mortgage of Mount Laurel, NJ, and the Department of Justice to resolve alleged violations of FHA requirements and the False Claims Act. In August last year, the MRB voted to release Freedom from any civil money penalties or administrative actions as part of the lender’s settlement with the DOJ. The largest civil money penalty imposed by the ...


April 14, 2017 - Inside FHA/VA Lending

Perceived Shortage of Appraisers Delays VA Closings, Raises Costs

The VA mortgage market is experiencing a shortage of qualified appraisers willing to accept VA loan assignments, causing longer wait times, delayed closings and higher appraisal costs. Testifying during a hearing called by the House Veterans Affairs’ Subcommittee on Economic Opportunity, top VA officials complained of difficulty in obtaining appraisals, particularly in rural and remote areas of the country. Jeffrey London, director of the VA Loan Guaranty Service, said the apparent shortage has resulted in turn times for appraisals that can take up to nine weeks. The VA maintains a seven-day timeliness requirement for appraisals for the VA Fee Panel. The problem was more acute last year when loan volumes were strong in many markets, including VA. Turnaround times for appraisals may have exceeded more than 30 days in some rural areas, according to the Appraisal Institute. The markets have ...


April 14, 2017 - Inside FHA/VA Lending

GNMA Officials Attribute Decline in VA Refis to Anti-Churning Policy

A steep drop in VA-backed securities issuance in the first quarter of 2017 suggests that Ginnie Mae’s efforts to curb serial refinancing of VA loans are working, according to agency officials. Speaking on a panel at the annual VA Lenders Conference in Kansas City, MO, this week, Ginnie executives said that a change in pooling requirements for streamlined refinance mortgages appears to have curbed a destructive appetite for refinancing new VA loans within six months of closing. The practice has caused faster prepayments in Ginnie mortgage-backed securities pools and smaller payouts to investors. VA refi volume fell 42.7 percent from the previous quarter (see chart on page 2), contributing significantly to the 32.2 percent decline in total VA loan securitization during the period. John Getchis, senior vice president at Ginnie Mae, said he does not think the churning trend will continue because the ...


April 14, 2017 - Inside FHA/VA Lending

PennyMac Claims Top Rank in Ginnie MBS Production in 1Q17

There is a new boss in the Ginnie Mae mortgage-backed securities market. PennyMac Financial rose to the top of the issuer ranking in the first quarter of 2017 despite a sharp decline in volume, according to a new analysis and ranking by Inside FHA/VA Lending. PennyMac issued $10.78 billion of single-family Ginnie securities during the first three months of the year. The figures in this analysis are based on Ginnie loan-level disclosures, which truncate loan amounts to $1,000 increments. PennyMac’s first-quarter production was off 27.9 percent from the fourth quarter of 2016, a slightly bigger decline than the 24.8 percent drop in overall Ginnie issuance. Even though the firm fared slightly worse than the total market, its first-quarter downturn was less severe than Wells Fargo’s. Wells has been the top Ginnie producer for a long time, as well as the top player in most segments of the ... [ Charts ]


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