The rapid deconsolidation in the Ginnie Mae issuer community and shift to nonbanks helped expand access for borrowers, but it’s also given the agency new issues to consider, officials said. Back in 2010-11, three Ginnie issuers dominated the program, noted Ginnie Mae President Ted Tozer during the Mortgage Bankers Association secondary-market conference in New York this week. But those three firms now account for just 14 percent of the agency’s business, and nonbanks held a combined 70 percent of the market, he said. Many new firms became issuers in part so they could get away from the credit overlays imposed by the national aggregators, Tozer said. The result is that the average score on a Ginnie loan is now 60 points lower than on loans securitized by Fannie Mae and Freddie Mac, he added. Michael Drayne, senior vice president in Ginnie’s office of issuer & portfolio management, said the ...

Recent circuit court rulings may bolster FHA lenders’ defense against the government’s heavy use of the False Claims Act in FHA lending cases, according to industry attorneys. In the years following the financial crisis, the Department of Justice and the relators bar have used the FCA aggressively to target banks and nonbank mortgage lenders for losses incurred by FHA due to poor underwriting and false certifications. The DOJ and the Department of Housing and Urban Development have recovered billions of dollars through settlements with various mortgage lenders and servicers, using increasingly creative theories of liability to hold them responsible for FHA losses. This week, the DOJ filed a lawsuit in federal court in Washington, DC, accusing Guild Mortgage of improper origination and underwriting of FHA-insured mortgage loans from January 2006 through December 2011. As in ...

There are important details in the recent M&T Bank settlement with the Department of Justice and in this week’s announced filing of a lawsuit against Guild Mortgage that could help lenders avoid a potential false claims lawsuit, according to industry observers. The government’s complaints against the two FHA lenders were brought under the False Claims Act, which penalizes acts that intend to defraud the government and taxpayers. The government has been using this powerful statutory tool in the mortgage arena in its attempt to recover FHA losses arising from fraud and noncompliance with agency requirements. As in previous FCA cases against FHA lenders, both M&T Bank and Guild Mortgage were accused of false certification, lax underwriting, poor quality control, failure to review early payment defaults, and failure to self-report deficient loans and remediate problems in a timely manner. In addition, the ...

The Department of Veterans Affairs has issued new guidance and some servicing reminders in connection with mobile-home foreclosures, consent judgments, servicer transfers, liquidation appraisal fees and others.VA servicers must specifically refer to the mobile home in foreclosure declaration documents to ensure that both the home and the land are properly foreclosed, the VA said. Many states require two separate foreclosure procedures for every transaction – one to foreclose the interest on the land and the other to foreclose on the title of the mobile home. The VA said foreclosure on the title of the mobile home may have to be filed with state’s Department of Motor Vehicles (DMV). When a VA loan on a home on wheels is referred to foreclosure, the servicer must inform the foreclosing attorney that it is a mobile home and whether a DMV filing is required. The VA will reconvey the mobile home to the ...

The Department of Veterans Affairs has clarified the type of documents lenders would need to provide clear and marketable title for conveyed properties to the VA in all states and U.S. territories. Under VA rules, each conveyance or transfer of real property to the VA shall be acceptable if “the holder covenants or warrants against the acts of the holder and those claiming under the holder (e.g. by special warranty deed).” In addition, the conveyance would be acceptable if it entitles the VA Secretary to such title as is or if it is acceptable to prudent lenders, informed buyers, title companies and attorneys, generally in the community in which the property is located. The VA said its determination of clear and marketable title depends on state statutory requirements. As a general requirement, documents for proper conveyance of clear and marketable title to the VA include the ...

Retail loan originations account for most new VA lending, but the correspondent channel plays an outsized role in the FHA market, especially in purchase-mortgage lending, according to a new analysis of Ginnie Mae mortgage-backed securities data by Inside FHA/VA Lending. Over half (51.1 percent) of VA loans securitized through Ginnie MBS in the first quarter of 2016 were retail originations, but only 39.1 percent of FHA loans came through that channel. The biggest source of FHA loans was correspondent lenders, which accounted for 45.8 percent of loans securitized during the first three months of this year. That was actually slightly below the 49.2 percent correspondent share of FHA loans back in 2014 and 46.8 percent last year. Correspondents accounted for well over half (53.9 percent) of FHA purchase mortgages during the first quarter, while playing a more ... [ 3 charts ]

Senate appropriators have opted to set aside fiscal 2017 funding for FHA information technology upgrades rather than authorize the agency to charge lenders an administrative fee to pay for improvements. The committee approved the funding as part of its proposed Housing and Urban Development-Transportation budget for FY 2017. Appropriators set aside $13 million in specific funds for FHA IT improvements. HUD proposed that up to $30 million in fees would be charged to lenders on endorsements through Sept. 30, 2019. Collections from such fees would be credited as offsetting collections to the Mutual Mortgage Insurance Fund. Specifically, HUD sought to use the collections to partially offset a requested $160 million funding for improvements to administrative contract support, FHA staffing and information technology. Congress has rejected the ...

Younger, active-service soldiers are outpacing non-military homebuyers under the age of 35 in home purchase – and they are buying larger, more expensive homes with VA loans, according to a new National Association of Realtors survey. The NAR survey, 2016 Veterans & Active Military Home Buyers and Sellers Profile, found quite a few contrasts between active-service military homebuyers and those who have never served. Of all homebuyers, 18 percent were veterans and 3 percent were in active military service. Of all home sellers, 21 percent were vets and 1 percent were active-military. According to the survey, the typical active-service homebuyer was a lot younger (median age of 34 years old) than non-military buyers (40 years old). The active-military homebuyer was more likely to be married and have several children living in the household. Consequently, they prefer larger single-family homes. Interestingly, the ...

Two studies published this week have found that reduced pricing and declining costs have given conventional mortgages with private mortgage insurance an edge over FHA in the battle for high-quality borrowers. When FHA reduced its annual premium by half a percent for most forward loans 15 months ago, FHA mortgages offered a more affordable payment option for borrowers compared to private MI, according to a new Urban Institute study. FHA’s lower mortgage insurance premium benefited particularly those who could afford a monthly mortgage payment but don’t have the required 20 percent downpayment as well as borrowers with pristine credit, wrote authors Laurie Goodman, director of UI’s Housing Finance Policy Center, and researcher Bing Bai. Until FHA’s 2015 premium cut, private MI was picking up some market share. The FHA price adjustment pushed FHA’s share to ...

The Department of Veterans Affairs has called upon holders of VA-guaranteed single-family mortgage loans to extend forbearance to distressed homeowners affected by the severe storms and flooding in Louisiana and Texas. In recent guidance, the VA described measures VA lenders may employ to provide relief to disaster-stricken homeowners. The agency recommended careful counseling to see whether borrower difficulties are related to the storms or have been the result of other events. If appropriate, prepayments may be reapplied to cure or prevent a borrower default. Servicers also may consider loan modification without VA’s prior approval if certain regulatory conditions are met. Although the holder of the loan is ultimately responsible for determining when to initiate foreclosure or complete termination action, the VA has requested a 90-day freeze on ...