Mortgage Insurance Profitability

Browse articles from all of our Newsletters related to Mortgage Insurance Profitability.

February 15, 2018 - Inside Mortgage Finance

Private MIs Lose Some Share Late in the Year, But Industry Gained Overall in 2017

Private mortgage insurers took a bigger share of the primary MI market last year, although the VA program rebounded in the fourth quarter, a new Inside Mortgage Finance analysis reveals.


February 9, 2018 - Inside FHA/VA Lending

FHA Delinquencies Spike in Puerto Rico as Island Remains in Disarray

FHA delinquencies rose sharply in Puerto Rico following the devastation brought by hurricanes Maria and Irma last year. At the end of 2017, 28.8 percent of FHA mortgages on the island were at some stage of delinquency, including 15.8 percent that have fallen 90 days behind on their mortgage payments. Deutsche Bank Securities analysts believe the spike in delinquency rates overall is “a short-term phenomenon.” They noted that FHA, Fannie Mae and Freddie Mac have declared temporary moratoria on evictions and foreclosures in Puerto Rico and other hurricane-ravaged regions. Issuer exposures in devastated areas remain unclear and Ginnie Mae has not updated its MBS hurricane exposure data since October last year. In the initial disclosure, the agency reported 9.7 percent (1,066,028 loans) of its total MBS portfolio were impacted by Harvey, Irma and Maria. The affected loans’ unpaid principal ...


February 9, 2018 - Inside FHA/VA Lending

Section 502 Lending Rises in FY17, Remains USDA’s Lead SF Program

The U.S. Department of Agriculture provided $19.3 billion in rural housing loan guarantees under its largest single-family housing program in FY 2017, according to the USDA Rural Housing Service. Last year’s total guarantees were $2.92 billion more than in fiscal 2016. Approximately 137,071 USDA loans were securitized in 2017. According to RHS, in October 2017, the loan guarantee upfront fee fell from 2.75 percent plus a monthly 0.5 percent fee to 1.0 percent plus an annual fee of 0.35 percent. The fee drop helped reverse a decline in obligations from the previous year, RHS noted. The average income for a Section 502 single-family guaranteed loan borrower was $59,191 in fiscal 2017, up from $57,962 in the prior fiscal year. For the lower-income Section 502 Direct program, USDA provided approximately $1.0 billion in housing loan guarantees, about $41.7 million higher than the ...


February 1, 2018 - Inside Mortgage Finance

Private MIs Restrict Coverage of Mortgages With High DTIs and Low Credit Scores

Several private mortgage insurers have announced they will no longer insure mortgage loans with a debt-to-income ratio exceeding 45 percent when combined with weaker credit profiles.


January 26, 2018 - Inside FHA/VA Lending

Around the Industry

Recoveries from FCA Settlements Involving FHA Loans Down Dramatically in 2017. The Department of Justice reported collecting more than $543 million in False Claims Act settlements and judgments to resolve housing and mortgage fraud complaints in FY 2017, down from $1.6 billion in FY 2016. The largest settlement of a False Claims Act case was $296 million, which involved an FHA lender and the DOJ. In September 2017, a unanimous jury in Houston, TX, found that Allied Home Mortgage Capital Corp. and Allied Home Mortgage Corp. violated the FCA and the Financial Institutions Reform, Recovery and Enforcement Act of 1989 by falsely certifying that thousands of high-risk, poor-quality loans were eligible for FHA insurance. The companies were also accused of originating FHA loans from more than 100 “shadow” branch offices without authorization from the ...


January 26, 2018 - Inside FHA/VA Lending

MGIC, NMI Restrict Loans with DTIs Over 45 Percent to 700 FICOs

The rising number of conventional purchase loans with debt-to-income ratios exceeding 45 percent combined with low credit scores has prompted two private mortgage insurers to take drastic action. Mortgage Guaranty Insurance Corp. and National MI have announced they will insure loans with DTIs exceeding 45 percent only when their credit score is 700 or greater. Mark Zimmerman, MGIC’s senior vice president for investor relations, said origination of such loans took off last summer when Fannie Mae eased guidelines on loans with 45 percent and above DTI. Fannie updated Desktop Underwriter by removing offsetting and compensating factors and started accepting the loans automatically instead of by referral. Freddie Mac does not accept such loans. Zimmerman said MGIC’s new guideline applies to loans with an agency automated underwriting system response. The company’s non-agency ...


January 26, 2018 - Inside FHA/VA Lending

Lennar’s Mortgage Arm Subject of DOJ Probe; Quicken Case Proceeds

The Department of Justice has had a busy month in terms of False Claims Act enforcement. Eagle Home Mortgage, a subsidiary of Lennar, is under government investigation for its FHA underwriting and quality-control processes – code words for a potential FCA lawsuit. Lennar, a nationwide builder of new homes, disclosed the probe in its annual Securities and Exchange Commission filing. The company said the Department of Justice has subpoenaed its mortgage subsidiary for documents relating to FHA-insured loans originated and sold in previous years. There were no other details. Lennar said Eagle has provided the DOJ with information related to the loans and is cooperating with investigators. “The DOJ has to date not asserted any claim for damages or penalties,” the Miami-based homebuilder said. Meanwhile, in federal district court in Detroit last week, government prosecutors argued with Quicken Loans’ attorney, Jeffrey Morganroth, over a motion to narrow the loan sample the ...


January 26, 2018 - Inside FHA/VA Lending

Hurricanes Clobbered FHA Loan Performance in Late 2017

The severe hurricanes that tormented a handful of markets during late summer of 2017 continued to push FHA default rates higher in the fourth quarter, a new Inside FHA/VA Lending analysis reveals. The number of FHA loans paying on time fell from 92.8 percent at the end of September to 91.9 percent at the end of the fourth quarter. Most of the deterioration took place in the more severe default categories. The number of FHA loans 90 days past due more than doubled during the three-month period, climbing to a hefty 0.92 percent of outstanding loans. And the number of FHA loans more than three-payments late increased by 39.7 percent, reaching 1.01 percent of the total outstanding. Three jurisdictions that bore the brunt of hurricanes Harvey, Irma and Maria – Texas, Florida and Puerto Rico – saw huge increases in FHA defaults. Puerto Rico saw a devastating impact in rising ... [Charts]


January 19, 2018 - Inside The GSEs

GSEs Align MI Rescission Relief With Reps and Warrants

Fannie Mae and Freddie Mac issued new GSE rescission relief principles to mortgage insurers this week that are designed to align better with the current representation-and-warranty framework. Early last year, the Federal Housing Finance Agency suggested that private MIs work on aligning their buyback and rescission guidelines with the mortgage giants. The new principles will add clarity, incorporate new features and allow for more rescission relief without increasing risk to the GSEs’ most significant counterparties, according to the announcement by the Federal Housing Finance Agency. This year, the mortgage insurers will revise their master policies to reflect the new principles and obtain the required approvals...


January 12, 2018 - Inside FHA/VA Lending

Around the Industry

FHA Announces Revised Method for Calculating Initial MIP for HECM Refis. FHA has modified the formula for calculating the initial mortgage insurance premium for Home Equity Conversion Mortgage refinances with case numbers assigned on or after Sept. 19, 2017. The formula was modified on Nov. 14, 2017. The change conforms to the final rule FHA implemented last year to strengthen the HECM program. The revised formula has been posted on FHA’s HECM page on hud.gov, FHA Connection Release Notes, dated Dec. 28, 2017. The FHAC Release Notes outline the changes and processing instructions for lenders to calculate the initial MIP for HECM refis. HUD Releases Guide to Help Borrowers and Disaster Victims Avoid Foreclosure. The Department of Housing and Urban Development has released the Homeowners Guide to Success to help struggling homeowners and ...


January 12, 2018 - Inside FHA/VA Lending

Florida District Court Allows U.S. to Intervene in FHA FCA Suit v. BofA

A federal district court in Florida has agreed to a government motion to intervene in a False Claims Act lawsuit against Bank of America in order to reach a settlement on behalf of a relator. Bruce Jacobs, a foreclosure attorney and relator in South Florida, filed the lawsuit. A former Miami prosecutor, he now represents homeowners in foreclosure proceedings initiated by financial institutions, including BofA. In his lawsuit, Jacobs alleged that BofA submitted false claims in violation of the FCA. Specifically, the bank allegedly submitted endorsements with unauthorized signatures and false mortgage assignments that would confer standing to foreclose. In addition, Jacobs additionally asserted a reverse FCA claim alleging that BofA made false statements when entering into the 2012 National Mortgage Settlement (NMS) consent judgment with the U.S. government. The landmark $25 billion settlement with ...


January 12, 2018 - Inside FHA/VA Lending

VA Clarifies Buyout Criteria for Uninsured, Unguaranteed Loans

Ginnie Mae is redefining the term “defective mortgage” to remind issuers of their obligations when confronted by a mortgage that does not have federal insurance or guarantee. The action also clarifies options issuers may consider in dealing with defective mortgages. Under their guarantee agreement with Ginnie, issuers are required to cure, buy out or replace single-family mortgages or manufactured home loans that are missing the requisite FHA insurance or VA or U.S. Department of Agriculture guarantee within 120 days after the issue date of the mortgage-backed securities. Ginnie made clear that mortgages that do not have federal insurance or guarantee by the deadline for final certification of the related pool or loan package are defective. In addition, mortgages that have been rejected by FHA, VA or USDA, or for which federal insurance or guarantee have been withdrawn, are defective as ...


January 12, 2018 - Inside FHA/VA Lending

GSE Housing Reform, Enforcement Highlight FHA, VA Outlook in 2018

2018 might not turn out to be a record-breaking production year for FHA and VA, but it could become significant in terms of enforcement and housing finance reform, according to industry stakeholders. Ed Pinto, codirector of the American Enterprise Institute’s International Center on Housing Risk, expects a slight increase in FHA’s and VA’s mortgage unit production and stronger dollar volumes due to rising house prices. Pinto believes loose purchase lending, particularly by FHA, and declining housing inventory are driving housing prices. This in turn results in FHA/VA cash-out refinancing at very high loan-to-value ratios, which helps feed the general economy but makes FHA lending riskier, he said. “We see a stronger demand for housing amid constrained housing supply,” said Pinto. “We’re seeing this vicious cycle of purchase transactions becoming more risky, cash-out transactions increasing in ...


Poll

How many new retail loan officers (net) is your shop looking to hire in the first quarter of 2018?

1 to 10. We’re being careful.
11 to 30. We’re feeling slightly bullish.
31 or more. We’re in expansion mode.
None. We’re staying right where we are, for now.
We’re cutting back.

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