Home Equity Loans

Browse articles from all of our Newsletters related to Home Equity Loans.

October 5, 2018 - Inside FHA/VA Lending

HECM Statute Does Not Disallow Lender’s Legal Right to Foreclose

The federal statute that authorized the Department of Housing and Urban Development to establish the Home Equity Conversion Mortgage program addresses only HUD’s authority to insure reverse mortgages and not the lender’s contractual right to foreclose, the U.S. Court of Appeals for the Eleventh Circuit has ruled. Affirming the district court’s decision in The Estate of Caldwell Jones, Jr., Executrix Vanessa Jones and Leah Grace Jones, Minor v. Live Well Financial Inc., the circuit court determined that the HECM statute did not prevent foreclosure pursuant to a reverse-mortgage contract originated before Aug. 4, 2014, even if the non-borrowing spouse continued to live in the mortgaged property. The question before the court was whether the statute can be read broadly to prevent foreclosure after the borrower’s death and prevent the non-borrowing spouse from being ejected from the ...


October 5, 2018 - Inside FHA/VA Lending

Failure to Record Indemnifications Exposes MMIF to Potential Losses

The Department of Housing and Urban Development’s failure to record indemnifications under a 2015 settlement agreement exposed the FHA insurance fund to potential losses of more than $47.4 million, according to an internal audit report. HUD’s Office of the Inspector General performed the audit to resolve issues related to two settlement agreements entered into by Fifth Third Bank and the Department of Justice. Fifth Third, a direct endorsement lender, had voluntarily disclosed to HUD 1,439 materially defective FHA loans that were originated between 2003 and 2013. HUD paid claims on 519 of those flawed loans, which generated more than $84.9 million in ineligible claims. In addition, FTB agreed to indemnify HUD for all losses for the remaining 920 FHA-insured mortgage loans. In January 2017, the bank voluntarily disclosed an additional 381 materially defective FHA loans. A HUD review of the ...


October 5, 2018 - Inside FHA/VA Lending

FHA Requires Second Appraisal on HECMs with Inflated Collateral

The reverse mortgage industry is supporting an FHA move to require a second appraisal for certain Home Equity Conversion Mortgage loans. FHA did not seek public comment on the interim policy change, which subjects all HECM loans, effective Oct. 1, to a collateral risk assessment to ensure the appraisal of the property is not inflated. The new policy has wide support in the reverse mortgage industry. A study conducted by the Department of Housing and Urban Development last year found that 37 percent of appraisals on approximately 134,000 HECMs tested positive for over-valuation. The inflated HECM appraisals were at least 3 percent higher than estimates by FHA’s proprietary automated valuation model, according to FHA Commissioner Brian Montgomery. The same study also found that higher-than-expected losses in the HECM program could be attributed in part to ...


October 5, 2018 - Inside FHA/VA Lending

Solid Gains in Purchase-Mortgage Business Offset 3Q18 Refi Slump

Ginnie Mae issuance of single-family mortgage-backed securities rode a homebuying wave during the third quarter of 2018, according to a new Inside FHA/VA Lending ranking and analysis. Ginnie issuers produced $105.63 billion of new MBS backed by forward mortgages during the July-September cycle, a 7.1 percent increase from the second quarter. That brought year-to-date production to $296.88 billion – down 11.3 percent from the first nine months of 2017. Purchase mortgages provided the boost for the Ginnie market. Some $75.69 billion of FHA and VA purchase mortgages were pooled in Ginnie MBS in the third quarter, a sturdy 13.1 percent increase from the previous period. Purchase loans accounted for 75.1 percent of FHA and VA loans securitized in the third quarter, compared to 64.7 percent for all of last year. Although production of these loans has gone up since the first quarter, year-to-date volume ... [Charts]


September 21, 2018 - Inside FHA/VA Lending

Government Share of Originations Down Slightly in Second Quarter

Originations of government-insured mortgages rose 11.2 percent from the first to the second quarter of 2018, according to Inside Mortgage Finance estimates. That increase was slightly lower than the 17.1 percent gain in total first-lien originations over that period. The big winner for the second quarter was the jumbo sector, where loan volume surged 33.5 percent from the first three months of the year. On a year-to-date basis, government lending was down 12.6 percent from the first half of 2017. This reflects the steep decline in refinance lending in general, which affected FHA/VA production significantly. Jumbo lending was also down, by 6.6 percent, from the first six months of last year, but the conventional-conforming market saw a 4.2 percent gain at the midway point in 2018. FHA/VA loans accounted for 22.8 percent of first-lien originations in the first half of 2018. The government share for all of last year was ... [Chart]


September 13, 2018 - Inside Mortgage Finance

Home-Equity Lending Up Sharply in 2Q18, But Market Still Far Below Its Potential

Home-equity lending accelerated in the second quarter of 2018, although the outstanding supply of home-equity lines of credit and closed-end seconds continued on its years-long downward trajectory, a new Inside Mortgage Finance analysis reveals. [Includes three data charts.]


September 7, 2018 - Inside FHA/VA Lending

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]


September 7, 2018 - Inside FHA/VA Lending

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]


Poll

Who "owns" the mortgage customer that’s brought to a wholesale lender through a loan broker?

The broker. It’s his/her client.

35%

The wholesale/table funder. They’re taking the financial risk.

30%

The broker, but only for the first year. After that, the borrower is fair game.

13%

Hard to answer. It’s a complicated issue.

22%