Ginnie Mae is considering a risk-sharing pilot that would have private capital absorb some of the potential losses on FHA loans securitized through the agency. In remarks at the Structured Finance Industry Group conference in Las Vegas recently, Michael Bright, executive vice president and chief operating officer with Ginnie, said no decision has been made on any credit-enhancement structure, as consultations with stakeholders are still ongoing. “We are actively looking at structures we can put in place where we bring in private capital to provide a [partial] guarantee,” explained Bright, Ginnie’s acting president. “The FHA is going be involved in a lot of them.” A risk-share partnership between FHA and private credit enhancers not only would protect the Mutual Mortgage Insurance Fund but reduce taxpayer risk as well, observers said. The risk-sharing concept would have private mortgage insurers assuming ...
Ginnie Mae is considering changes to the existing pledge agreement that allows mortgage-backed securities issuers to borrow against servicing rights. Revising the acknowledgement agreement between Ginnie, issuers and third-party creditors would ensure that nonbank participants would have sufficient liquidity to make timely payments to investors, said Michael Bright, executive vice president and chief financial officer of Ginnie Mae. In remarks at the recent Structured Finance Industry Group conference in Las Vegas, Bright said the change aims to strengthen Ginnie’s ability to oversee its issuer base, which has shifted from large regulated banks to mostly unregulated nonbanks. Nonbanks filled the void after a contingent of large banks exited the FHA market due to concern about the government’s use of the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act in ...
Private MIs seized a bigger share of the market in 2017, even as VA rebounded strongly in the fourth quarter, an Inside Mortgage Finance analysis of the primary MI market found. Private MIs wrote $69.9 billion in new flow business in the fourth quarter, down 9.7 percent from the previous quarter. Private MI business accounted for 39.2 percent of total primary MI written in the quarter while FHA lost ground after business dropped 10.9 percent, leaving it with a reduced 33.3 percent market share for the period. After having a stellar year in 2016, VA lending eased to 24.1 percent of the primary MI market last year – still its third-best year since the financial crisis. The tiger in VA’s tank was refinance, which accounted for 44.1 percent of the agency’s lending, compared to just 9.8 percent of private ...
The volume of FHA and VA loans securitized in Ginnie Mae pools in 2017 declined from the previous year, according to an analysis of agency data. FHA loans delivered into Ginnie mortgage-backed securities last year totaled $250.5 billion, down 8.7 percent from 2016. Purchase loans comprised 69.6 percent of Ginnie MBS issuances backed by FHA loans over the 12- month period, while refinances accounted for 24.8 percent. FHA borrowers had an average FICO score of 675.3, suggesting a more traditional borrower base of first-time homebuyers and borrowers with credit issues. The FHA loans that were securitized had an average loan-to-value ratio of 92.8 percent and a debt-to-income ratio of 41.3 percent. California led all states in FHA mortgage securitization, with $39.0 billion for all of last year. FHA originations, however, dropped 16.6 percent year-over-year. The other top states in terms of ... [ charts ]
FHA and VA single-family originations fell in the fourth quarter of 2017 due to a decline in purchase mortgage originations that was offset somewhat by an increase in refinance business. FHA endorsed $237.3 billion in forward single-family mortgages in 2017 notwithstanding an 11.9 percent drop in the fourth quarter. FHA production also dropped 7.1 percent year-over-year. Market observers attributed the decline in FHA originations to high mortgage insurance premiums, stiffer competition from private lenders’ low-downpayment programs, and a more aggressive conventional-conforming mortgage market. A new analysis by Inside Mortgage Finance also found that government-backed lending and the jumbo market saw the biggest production declines from the prior quarter. In particular, IMF’s research found that FHA, VA and U.S. Department of Agriculture rural-housing originations fell ... [Charts]
Analysts are monitoring prepayment speeds to see if Ginnie Mae’s efforts to curb serial refinancing or loan churning are having an impact. Wells Fargo Securities analysts said a conversation about churning has started with a handful of Ginnie mortgage-backed securities issuers, which “should be a net benefit for MBS,” especially for higher coupons where outlier speeds are most prevalent. In a recent alert, the analysts said the momentum continues to build to curb churning of VA loans following notification of lenders suspected of engaging in the activity. Nine issuers have received written warnings based on unusual prepayment rates in VA-backed MBS. Such deviations from market norms for an extended period are not acceptable because they put veterans’ earned benefits at risk, the agency said. The outliers were discovered after a comprehensive review of issuer performance and ...
Issuers Ginnie Mae had targeted for allegedly churning VA loans have denied engaging in the practice. Flagstar Bank and NewDay Financial said they have policies and procedures to prevent churning, or serial refinancing, but offered no explanation as to why they were on Ginnie’s list. Both companies were among the nine issuers Ginnie notified earlier this month for performance that “is materially worse than its peers as to be an outlier.” The agency made its determination after analyzing pool characteristics of all issuers. The analysis revealed an unusually higher prepayment rate for securitized VA loans over a long period for all nine issuers compared to other issuers. “Under the analysis, [a] handful of issuers was shown to be consistent material outliers over an extended period,” said Ginnie. “The [review] identified market participants whose pool performance clearly and persistently deviates from ...
Approximately 19 percent of mortgage-related complaints filed by senior citizens with the Consumer Financial Protection Bureau over the last two years involved FHA forward and reverse mortgages and VA loans, according to the CFPB complaints database. The bureau received 8,323 complaints from the elderly between 2016 and 2017 regarding their experiences with FHA, VA, and Home Equity Conversion Mortgages, home-equity loans or lines of credit, conventional mortgages and other home-loan products. Over the two-year period, seniors reported 1,562 problems with their FHA mortgages (702 complaints), reverse mortgages/HECMs (488) and VA-guaranteed loans (372). Conventional mortgages received the highest number of senior citizen complaints (4,240) during the period, while home-equity loan products and other mortgages garnered 780 and 1,741 complaints, respectively. Total complaints overall began trending downward in the first quarter of 2017, from 1,241 to 508 in the ... [Chart]
The Trump administration is seeking additional budget allocations in FY 2019 for FHA and Ginnie Mae to pay technology upgrades, additional staffing, and increased issuer oversight. The budget request seeks an additional $20 million above the 2017 enacted level of $130 million for FHA to upgrade its aging information technology – some still based on the antiquated COBOL programming language – and contract support. The additional funding would be offset by charging lenders an IT fee of no more than $25 per loan, according to the proposed budget for the Department of Housing and Urban Development. In addition, the 2019 HUD budget requests $400 billion in new loan guarantees under the Mutual Mortgage Insurance Fund for forward single-family mortgages Home Equity Conversion Mortgages, multifamily housing, and manufactured housing. The requested $400 billion would remain available ...
A greater focus on reverse-mortgage servicing and loss mitigation would be effective in addressing property-charge foreclosures while also preserving the Home Equity Conversion Mortgage program’s core mission of helping cash-strapped senior citizens, says a new study from the National Consumer Law Center. The study by staff attorney Odette Williamson and Sarah Mancini, of counsel to the NCLC, said the government’s mistaken response to surging insurance claims and increasing defaults on property tax and insurance obligations was to change origination policies. Specifically, the Department of Housing and Urban Development reduced the proceeds available through a reverse mortgage and imposed new underwriting guidelines to curb rising reverse-mortgage foreclosures and stem increased losses to the FHA insurance fund. Although the repercussions of the two distinct problems related to ...