Obama administration officials and federal regulators met recently with mortgage industry representatives to discuss lender overlays and other obstacles preventing borrowers with slightly tainted credit and first-time homebuyers from obtaining a mortgage. Neither administration officials nor industry participants, however, spoke on or off the record about the things that were discussed during the Sept. 17 meeting at the White House. It was also unclear whether both sides have agreed on any solutions to the issues that lenders say are preventing them from lending. Sources, however, said one major issue is lenders’ uncertainty about their legal responsibilities and liabilities, which already have cost the industry billions of dollars in massive legacy settlements. Lenders have complained that even the slightest loan paperwork error could force them out of the ...

Ginnie Mae securitized a relatively higher volume of loans for African-American borrowers than did Fannie Mae or Freddie Mac, according to a new Inside FHA Lending analysis of recently released Home Mortgage Disclosure Act data covering 2013 mortgage originations. Nearly a quarter, 24.7 percent, of mortgages made to black borrowers last year had FHA, VA or rural housing loans financed through Ginnie Mae, loan-level HMDA data show. Fannie Mae (19.2 percent) and Freddie Mac (9.9 percent) also accounted for large shares of mortgages for black borrowers. However, blacks accounted for just 4.2 percent of mortgages with the race of the primary borrower identified in HMDA reports. Fannie actually had a bigger share of the Hispanic market (24.7 percent), but Ginnie accounted for a substantial 17.3 percent of mortgages made to Hispanic borrowers last year. All three agencies saw ... [1 chart]

Issuers of securities backed by Home Equity Conversion Mortgages created $518 million in new HMBS pools during August, the third largest monthly HMBS issuance this year and the latest month for which HMBS issuance data was available. August’s new issuance total was up slightly from July’s $507 million, according to New View Advisors, which advises financial services clients on capital markets, product development and investment strategies. Ninety-one pools were issued, consisting of 46 original issuance and 45 tail pools. Original HMBS pools are created when a pool of FHA-insured reverse mortgages is securitized for the first time. Tail HMBS issuances are HMBS pools created from the uncertified portions of HECMs that have already had their original HMBS issuance. Tail issuances accounted for about $140 million. Beginning with FY 2014, HECM principal limits were ...

An estimated $336 million out of a $614 million settlement that JPMorgan Chase agreed to pay for not complying with FHA requirements will go towards stabilizing the agency’s ailing Mutual Mortgage Insurance Fund. On Feb. 4, 2014, the U.S. Attorney’s Office for the Southern District of New York took over a whistleblower lawsuit and started an investigation of Chase on behalf of the government for alleged violations of the False Claims Act. The whistleblower or “relator” alleged that Chase, an approved FHA direct endorsement lender, had not followed FHA requirements when underwriting loans, causing the MMIF to incur significant losses when the borrowers defaulted on their loans. The U.S. Attorney filed suit against Chase based on the results of an audit conducted by HUD’s Inspector General that looked into the bank’s underwriting and refinancing of FHA loans. The lawsuit alleged that ...

FHA total originations rose 9.9 percent month-over-month in July as purchase mortgage activity continued to rise, according to Inside FHA Lending’s analysis of agency data. Lenders produced a combined $13.01 billion in new FHA-insured mortgages, up from $11.85 billion in June. Purchase mortgages accounted for 81.9 percent of total FHA production during July, the latest month for which FHA originations data were available. The July increase reflects an upward monthly trend in FHA lending that began in March, when FHA originations totaled $8.74 billion. Production then climbed steadily to $10.36 billion in April, $10.61 billion in May and $11.85 billion in June. Originations jumped 16.0 percent from the first to the second quarter. A recent analysis by affiliated publication Inside Mortgage Finance found that most of Ginnie Mae’s purchase activities (FHA, VA and rural housing loans) in the ...

Ginnie Mae this week unveiled a position paper outlining its views and new strategies for its mortgage-backed securities program with greater emphasis on liquidity and on the preservation of servicing rights both as an activity and as an asset class. During a conference it sponsored this week, Ginnie announced a number of initiatives that would help the agency adapt its complex financial and operational structures to a post-crisis secondary mortgage market in which non-depository and smaller institutions are playing a bigger role. Ginnie underscored...

Loans originated by mortgage brokers tended to have slightly lower credit scores and slightly higher debt-to-income ratios than production by retail lenders and correspondents. An Inside Mortgage Trends analysis of mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae during the second quarter found that broker originations had an average credit score of 721.9 – compared to 728.5 for retail production and 723.4 for correspondent originations. The average DTI for ... [Includes one data chart]

Current and former commissioners of the FHA this week said the venerable program could carry out its mission more effectively if it was an independent, self-funded government enterprise. During this week’s Housing Summit hosted by the Bipartisan Policy Center, the five FHA commissioners – incumbent Carol Galante and alumni Brian Montgomery, Nicolas Retsinas, David Stevens and John Weicher – concurred that working with Congress, particularly on budget issues, has made it more difficult for the agency to operate safely and soundly. “We’re...

Obama will meet with top banking executives and industry trade groups on Sept. 17 to explore potential solutions to lender overlays and other problems that hinder first-time homebuyers and other qualified borrowers from obtaining an FHA or conventional mortgage. The meeting is expected to touch on key lender issues, including credit overlays, government enforcement actions, regulatory burden and risk-based versus FHA pricing. Lenders say they are willing to originate single-family mortgages to qualified borrowers and first-time homebuyers but they feel the post-crisis environment has turned hostile against them. Repurchases and indemnifications have dampened their willingness to lend to moderate- and lower-income borrowers, they admit. Regardless of policy changes designed to increase lending in the lower credit score range (620 to 679), FHA enforcement actions to ...

The FHA Mutual Mortgage Insurance Fund account balances fell by $0.5 billion during the second quarter of 2014 to $45.3 billion due to higher claim payments and property expenses. Observers, nonetheless, remain optimistic the fund will return to full stability in 2015 with no further change in the mortgage insurance premium charged to borrowers. The MMIF’s total balances peaked at $48.4 billion in the third quarter of 2013 and then slipped gradually over the last three quarters, according to data in the FHA’s latest report to Congress regarding the financial health of the Mutual Mortgage Insurance Fund. Total revenues from premium collections, property sale, and note sale proceeds were $4.3 billion, while $5.1 billion was paid to cover claims and property expenses in the second quarter. This resulted in a negative$821 million cash flow in the quarter, the smallest outflow since ...