Total FHA originations dropped significantly in the first quarter of 2014 as borrower access to credit remained a big problem for the agency, according to Inside FHA Lending’s analysis of agency data. FHA lenders ended the first quarter with a combined $28.3 billion in new originations, down 21.0 percent from the fourth quarter of 2013. Production also fell a whopping 55.6 percent from the same period a year ago. Purchase transactions comprised the bulk of new FHA loans but, so far, the much-anticipated boom in new purchase lending has yet to materialize. The high cost of FHA loans, due mainly to higher mortgage insurance premiums and a requirement to maintain mortgage insurance for the life of the loan, has made it difficult for borrowers to obtain an FHA-insured loan. Lender overlays also have restricted access to FHA credit. The FHA has raised premiums five times since 2009 to ... [1 chart]

The Department of Veterans Affairs said there may be a need for further clarification of its newly issued qualified mortgage (QM) rule to allay lender fear of potential liability if they originate VA streamlined refinances, also known as Interest Rate Reduction Refinance Loans (IRRRL), with a rebuttable presumption. Industry sources say VA lenders remain apprehensive despite assurances by agency officials that little has changed in the VA lending process as a result of the agency’s interim final rule. VA issued its QM document on May 9 in compliance with the Dodd-Frank Act, defining the types of VA loans that are “qualified mortgages” for purposes of the new ability-to-repay (ATR) provisions of the Truth in Lending Act. The Act also imposed similar requirements upon the FHA and the Department of Agriculture for the loans they insure or guarantee. The agency said it issued the rule on ...

The slowdown in VA activity in the last quarter of 2013 spilled over into the first quarter of this year as lenders reported a 13.0 percent decline in loan production during the period, according to an Inside FHA Lending analysis of agency data. The downward trend in volume began at the end of the first quarter last year although VA still considered 2013 a record year for VA originations. VA lenders reported $19.5 billion in total production for the quarter, down from $22.4 billion in the previous quarter. Production, likewise, dropped 47.9 percent this year compared to the same period last year. Despite the slowdown, lenders remain optimistic about the VA market. “We have spent a lot of time understanding the perils of lending to veterans and learning to deal with the losses, and we are all in with VA lending,” said one lender. “When you do VA loans you talk about having ... [1 chart]

The Department of Veterans Affairs is studying the impact of fees and may propose alternative regulations to amend the current structure, according to agency officials. In a briefing with the National Association of Realtors, VA staff attorney Erica Lewis said the agency has begun looking at the fees VA charges in response to complaints from some lenders. During the briefing, some NAR members expressed concerns that some of the VA loan requirements, such as pest inspections, disadvantage veterans because they may dissuade sellers from accepting offers that could potentially create additional fees, which cannot be paid by the homebuyer. Lewis also suggested that real estate agents request a waiver from the VA field office nearest to the location of the property being purchased to ...

Ginnie Mae has issued a clarification as to when issuers can buy certain loans out of the pool and redefined certain familiar terms used by government agencies in insuring or guaranteeing mortgage loans. The agency’s mortgage-backed securities guide allows issuers to purchase loans out of pools when the borrower has missed three consecutive monthly mortgage payments or is 90 days past due. However, the guide is unclear whether the issuer must wait at least three months before buying a loan out of the pool if the borrower is making at least a partial payment while the loan is in default. Ginnie Mae made clear in a May 16 memo that issuers may purchase a loan from an MBS pool even though it is seriously delinquent. For example, if the last installment payment on a mortgage loan was Dec. 1 and the borrower missed payments in ...

The FHA has proposed to bring its adjustable-rate mortgage (ARM) rules in line with those of the Consumer Financial Protection Bureau to enable FHA lenders to comply with the new servicing requirements under the Truth in Lending Act. Specifically, two proposed changes would align both agencies’ interest-rate adjustment and disclosure-notification regulations for ARM borrowers as required by the revised TILA. The CFPB issued its final TILA servicing rule in February 2013 but delayed the effective date for another year to allow the Department of Housing and Urban Development sufficient time to write rules for new notification requirements for FHA-insured ARMs with a 30-day look-back period. Hence, FHA ARMs must comply with the new TILA rule on or after Jan. 10, 2015. The FHA insures 1-, 3-, 5-, 7- or 10-year ARMs. The CFPB’s revised look-back period and notification requirements would ...

The Department of Housing and Urban Development is planning to auction $4.8 billion of nonperforming single-family mortgage loans in two offerings under the FHA Single Family Loan Sale (SFLS) initiative. The auction – HUD SFLS 2014-2 – will be next month. A national offering of roughly 23,200 loans totaling $4 billion in unpaid principal balance is scheduled for a bid on June 11. The second part of the auction is an offering of 4,800 loans totaling $800 million in UPB in designated geographic areas that are aimed at a neighborhood stabilization outcome or “NSO-targeted” loan pools. Bidding will be on June 25. The eight NSO regions for the June offering are Atlanta, Chicago, Detroit, Miami, Philadelphia, San Antonio, San Bernardino County, CA, and Cumberland County., NJ. SEBA Professional Services, a woman-owned contracting firm, has ...

A significant number of independent mortgage bankers failed to turn a profit during the first quarter of 2014, but many firms are tightening their belts and hanging on, thanks to a strong market for mortgage-servicing rights. According to the Mortgage Bankers Association’s annual performance report due out late this week, mortgage bankers saw their net profit margin on production and secondary marketing slump to a negative 9 basis points, said MBA Chief Economist Mike Fratantoni. The number was preliminary, but it represents a huge decline since the gung-ho first half of 2013, when lenders generated about 120 bps in net income from production. Only about 55 percent of lenders participating in the survey, which is includes a large number of independent mortgage bankers, earned...

Aggregate mortgage-banking income reported by an eclectic group of 32 lenders fell 25.9 percent from the fourth quarter of 2013 to the first quarter of this year, although many companies saw increased earnings, according to a new Inside Mortgage Trends analysis of earnings reports. The 32 lenders included all of the top originators and servicers in the industry, along with a number of other publicly traded nonbanks and depository institutions ... [Includes one data chart]

The presence of the Consumer Financial Protection Bureau is causing a seismic shift in the way mortgage lenders relate to their customers, with customer dissatisfaction a high-profile barometer that can quickly capture the bureau’s attention and focus it with an uncomfortable intensity in an unwanted direction. “For the first time in our industry’s history, the safety and soundness of the financial institution is just one part, albeit an important one, of what the government hopes to ...