The issues behind the Department of Housing and Urban Development’s draft FHA condominium rules are “too complex” but lenders may expect a final rule in September, said HUD Secretary Ben Carson. Carson’s announcement of a release date for the long-anticipated condominium rules eases the mounting pressure on the secretary and the department to finalize the draft rules. On June 18, 54 senators and 120 members of the House signed a letter urging Carson to implement the changes in H.R. 3700, the Housing Opportunity Through Modernization Act, which would ease FHA requirements for financing condo purchases and refinancings. The bill was signed into law on July 29, 2016, and HUD published a proposed condo rule two months later. “We have been pushing it,” Carson said during a House committee oversight hearing this week. “It is a complex issue because when you are talking ...

Ginnie Mae will be working with FHA, VA and the U.S. Department of Agriculture to standardize origination policies and requirements for digital mortgages as it moves into the digital age of its secondary market business. Ginnie will coordinate with the agencies while developing technical standards for electronic closings, digital mortgage instruments and electronic vaults. All this work is part of the agency’s three-year strategy, Ginnie Mae 2020, to modernize its mortgage-backed securities program and platform, strengthen its counterparty risk management capability, and explore new ways to lower or eliminate risk from the system. As part of the modernization effort, Ginnie envisions a process that would allow it to accept digital promissory notes and other digitized loan files as eligible collateral for its MBS. It would encompass loan application through securitization. The plan calls for gradual implementation of ...

FHA purchase loan originations, which comprise the bulk of the agency’s business, declined during the first quarter of 2018 as mortgage interest rates continued to rise. Approximately $34.8 billion in FHA-insured purchase mortgages were made during the first three months, down 13.5 percent from the previous quarter. Purchase originations also fell 12.0 percent year-over-year, data showed. Purchase loans accounted for 71.1 percent of all FHA loans made to consumers in the first quarter. Fairway Independent Mortgage Corp. led all lenders with $880.8 million. This week, the benchmark 30-year fixed-rate mortgage rose by 1 basis point to 4.71 percent from last week, according to Bankrate’s weekly survey of large lenders. Four weeks ago, the rate was 4.64 percent. Over the past 52 weeks, the 30-year fixed has averaged 4.31 percent, Bankrate added. This week’s rate is 40 basis points higher than the ... [Charts]

Ginnie Mae will soon require issuers to undergo stress testing to see if they have the financial strength to withstand adverse circumstances or a severe economic downturn.The agency said it will soon begin phasing in stress testing, which would play a key role in issuer oversight and liquidity. The initiative is part of Ginnie’s effort to enhance the management of counterparty risk, one of the so-called three pillars of progress underlying the agency’s 2020 initiative. In addition to stronger risk management, the initiative aims to make significant technological improvements by 2020 and explore new opportunities to strengthen Ginnie’s MBS program. Issuers that meet the thresholds for required ratings will probably be the first ones to be stress tested, the agency said. Ginnie is also looking for ways to evaluate exposure to a single counterparty, relative to the counterparty’s financial health and the value of ...

Department of Housing and Urban Development Secretary Ben Carson reiterated concerns raised previously by his deputies regarding certain lending trends that could potentially endanger FHA’s financial health. Testifying during a HUD oversight hearing in the House Financial Services Committee this week, Carson said the department is scrutinizing certain policies that may be causing or contributing to the growth of cash-out transactions, unusually high debt-to-income ratios, serious loan delinquencies and early payment defaults. Carson said maintaining the health of the FHA mortgage insurance fund is critical in maintaining the agency as a source of credit for first time, low- and moderate-income, and minority homebuyers. The share of cash-out among all of FHA’s refinance transactions has increased to 60 percent as of April 2018 from 45 percent a year ago, he said. Also during that ...

The mortgage banking industry is backing a legislative proposal that would limit the government’s use of the False Claims Act to pursue hefty damages against FHA lenders. In a recent letter to the bill’s co-sponsors, the Mortgage Bankers Association expressed its strong support for H.R. 5993, the Fixing Housing Access Act of 2018. The MBA noted that originating FHA-insured loans has become very risky in recent years largely due to the civil actions brought by the Department of Justice under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. Fifty-four FCA and FIRREA cases against financial institutions have settled for billions of dollars between July 2011 and January 2018, according to data compiled by the Buckley Sandler law firm. Four cases are pending and one civil penalty award was reversed on appeal. Those lenders who were on the ...

Black Knight Financial Services, which currently collects all servicing data for VA, will no longer do the job after March 2019, according to the Department of Veterans Affairs. BKFS will stop providing the service when VA transitions to a new enhanced VALERI system. VA servicers currently use the VA Loan Electronic Reporting Interface system to upload servicing information. VALERI is undergoing a multi-phase restructuring for conversion to a fully automated system spanning loan application, origination and servicing. The enhanced servicing component of VALERI will be ready by late spring next year. As part of the transition, VA will ensure that all servicers are plugged into the new VALERI system before it becomes fully operational. VA’s transition plan covers all methods and procedures for reporting information to VALERI. These include use of a licensed servicing system or a proprietary in-house servicing system that automatically reports data to VALERI, or logging into the VALERI web portal to manually upload and enter data.

Ginnie Mae has added a new metric to make it easier for approved issuers to track the prepayment rates of single-family loans underlying they have delivered into mortgage-backed securities. The new prepayment metric would enhance Ginnie’s Issuer Operational Performance Profile (IOPP) tool, which was launched in 2015 to help issuers measure their performance against the agency’s standards. The new tool is the latest move by Ginnie to ensure the integrity and market predictability of Ginnie MBS. The prepayment tool will be available to lenders beginning June 25. The announcement follows an agency administrative action last week against three VA lenders that were penalized for cherry picking and refinancing unseasoned VA loans not to benefit borrowers but to charge them higher fees. The lenders – Freedom Mortgage, SunWest Mortgage Co. and NewDay USA – were among nine issuers that ...

Now that Housing and Urban Development Secretary Ben Carson has sworn in a new FHA commissioner, reverse mortgage lenders are hoping to see some changes in the Home Equity Conversion Mortgage program. The National Reverse Mortgage Lenders Association is planning to ask FHA Commissioner Brian Montgomery for changes in the HECM program, particularly at the back end, to make it more profitable for lenders. Peter Bell, the group’s chief executive officer, believes there are opportunities to reduce the cost of the HECM program to the FHA fund by having better servicing procedures. “We would like to see certain loss mitigation procedures in the new HECM rules to be made available to all reverse-mortgage loans,” he said. Some of those procedures apply only to loans originated on or after the new rules became effective, such as “cash for keys.” Cash for keys is a cash offer by a lender to a ...

All home loans with a VA guarantee, including Interest Rate Reduction Refinance Loans, require a lender’s certification, according to the Department of Veterans Affairs. In recent guidance, the agency clarified that the lender certification requirement applies to all VA-backed loans, and is not contingent upon the type of VA loan. Jeff London, director of the VA Loan Guaranty Service, said there have been inquiries from lenders and the VA regional loan centers regarding the validity of the lender certification on an IRRRL. The lender certification is required on IRRRLs, whether or not underwriting is required, London clarified. Under VA rules, lenders must certify that the VA loans they originate comply fully with the law and meet VA’s underwriting standards. The IRRRL is a streamlined program that requires very little verification yet allows veterans to refinance at a lower rate based on their ...