Information technology improvement is the top priority of government lending programs in the coming months and into 2019. Agency representatives at the Mortgage Bankers Association’s annual convention in Washington, DC, said policy changes are in the works to enhance and improve operations, compliance and customer service. FHA Commissioner Brian Montgomery, who joined the agency four months ago, said IT modernization is his primary concern. A state-of-the-art IT system and advanced data analytics are needed to manage FHA exposures effectively, he said. Montgomery made clear FHA has no plans to build a proprietary system but is considering the idea of shared technology, possibly with VA and USDA; something based on Fannie Mae’s and Freddie Mac’s systems; or some off-the-shelf software. In his view, a modern IT system would have automated underwriting that provides ...

Ginnie Mae has made considerable progress in dealing with rapid prepayments on VA loans but prepayment speeds on Ginnie mortgage-backed securities in general continue to annoy investors. Prepay speeds on Ginnie MBS are now at the lowest since 2014 but it is not enough for agency Executive Vice President Maren Kasper to feel confident as she addressed the annual convention of the Mortgage Bankers Association this week. “Our prepayment issue is not solved,” said Kasper, as she spoke on a panel with representatives of government-lending programs. The agency continues to hear from investors about the problem, she said. Kasper cited two instances where Ginnie officials were summoned to meetings in China and New York to explain the prepayments to irate investors. They threatened to stop purchasing Ginnie bonds, she said. Kasper declined to say how bad the ...

Community mortgage lenders are asking the U.S. Senate to consider with caution before voting on legislative language passed recently by the House of Representatives to address “orphan” VA streamline refinance loans. Specifically, the Community Mortgage Lenders of America asked the Senate to step back and allow some time for substitute language to be presented with input from the industry and the Department of Veterans Affairs. At issue is the wording in H.R. 6737, the Protect Affordable Mortgages for Veterans Act of 2018. The bill fixes a technical issue that prevented VA lenders from pooling certain VA Interest Rate Reduction Refinance Loans in Ginnie Mae mortgage-backed securities pools. Approximately 2,500 VA refi loans were affected by an inconsistency between the loan seasoning guidelines issued by Ginnie in late 2016 and provisions in the ...

Mortgage lenders are urging the U.S. Department of Agriculture/Rural Housing Service to eliminate the current interest-rate cap on single-family USDA loans because it has long outlived its usefulness. RHS is reevaluating the interest-rate cap to determine whether it should be modified to allow borrowers who are ineligible for a conventional mortgage to obtain affordable financing for a home purchase, home rehabilitation or a streamline refinance. Lenders, however, argue that the cap is unrealistic under current market conditions. The agency is currently seeking comment on possible changes. Congress authorized RHS in 1990 to establish a maximum interest rate to help spur loan origination in eligible rural areas. The interest-rate cap is pegged to the current Fannie Mae posted yield for 90-day delivery plus 1 percent for 30-year fixed-rate conventional loans, rounded to the nearest quarter of ...

The Department of Veterans Affairs will begin a new rulemaking on qualified mortgages to conform to Dodd-Frank reform act mandates. Observers say the move is simply housekeeping, since the previous QM interim final rule (IFR) requirements were rendered moot with the enactment of the Economic Growth, Regulatory Relief, and Consumer Protection Act back in May. The new law, also known as the Dodd-Frank reform act, superseded the previous rule’s seasoning and recoupment requirements for VA Interest Rate Reduction Refinance Loans. Specifically, the act removed the category of rebuttable presumption for IRRRLs deemed as QM under the interim final rule. It also imposed new requirements that were not considered at the time the IFR was issued. The VA did not say whether changes were made ...

Bright’s Confirmation Delayed. With the Senate adjourning last week for the midterm elections, Michael Bright’s confirmation as president of Ginnie Mae will have to wait. President Trump nominated Bright, executive vice president and chief operating officer, last May and he was confirmed by the Senate Committee on Banking, Housing and Urban Affairs in August. Ginnie Mae has been without a permanent head since January 2017 when former president Ted Tozer stepped down. Bright has since been acting president of the agency. Both the House and the Senate will be back on Nov. 13 for a lame-duck session. President Trump Wants 5 Percent Budget Cuts from Cabinet Agencies. President Trump has directed his Cabinet secretaries to trim 5 percent from their respective agencies’ FY2019 budget request. Some agencies can do more than 5 percent, he suggested. It is unclear which of the ...

Fun fact: Nonbanks went over the 60.0 percent threshold in Ginnie Mae market share during the third quarter.

As IMFnews went to press, multiple telephone messages and emails to 360 Mortgage had not been returned.

FHA debt-to-income ratios are also deteriorating…

IMA described the selling originator as an “independent mortgage banker with strong net worth...