Provisions to protect VA borrowers from abusive lending are now in effect after President Trump signed into law a broad regulatory relief package last week. The VA measures are part of S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, which the U.S. Senate passed on March 14 and the House approved on May 22. The bipartisan measures became effective for VA loan applications taken on or after May 25, 2018. They were part of the bipartisan Protecting Veterans from Predatory Lending Act, which Sens. Thom Tillis, R-NC, and Elizabeth Warren, D-MA, introduced in January and later incorporated in S. 2155. The bill was designed to protect VA borrowers from loan churning or serial refinancing and specifically targeted the VA’s Interest Rate Reduction Refinance Loan program, where the churned VA loans ended up. According to the agency, such practices not ...

Officials at the government’s mortgage programs said that major investments in technology will make their programs more efficient and pay for themselves, during a panel session at the Mortgage Bankers Association secondary market conference last week in New York. Michelle Corridon, deputy director in the single-family housing guaranteed loan division of the U.S. Department of Agriculture, said her program’s focus now is on infrastructure and innovation. The USDA is instituting a technology fee on every closed loan starting in October, she said. The enhanced online system will include new screens for housing, which now shares a landing page with other rural programs. When it’s complete, the new system will handle the process from guaranty commitment through loan delivery. In another efficiency move, rural housing is “rolling up” processing chores to fewer offices so it doesn’t have ...

California continued to lead all states in FHA and VA mortgage securitization in the first three months of 2018. The Golden State accounted for 15.3 percent of the $50.6 billion of FHA loans delivered into Ginnie Mae mortgage-backed securities in the first quarter. FHA loans comprised 18.2 percent of loans securitized by Fannie Mae, Freddie Mac and Ginnie Mae, and 34.6 percent of agency-securitized loans with primary mortgage insurance. About 66.6 percent of FHA loans securitized during the period were for purchase mortgages while refinance loans accounted for 27.5 percent. The average loan-to-value ratio of FHA loans in Ginnie pools was 93.0 percent. The average credit score of 668.2 reflected FHA’s traditional base of lower-income and first-time homebuyers, with an average debt-to-income ratio of 42.4 percent. The other states among the top five in terms of FHA deliveries into Ginnie pools were ... [Chart]

Mortgage brokers and their wholesale funders gained some share in the FHA/VA market during the first quarter of 2018, according to a new Inside FHA/VA Lending analysis. Survey data collected by Inside Mortgage Finance show that all three production channels took big hits in FHA/VA volume in early 2018. The $49.11 billion in government-insured lending reported by participating lenders was down 20.7 percent from the previous quarter and 10.8 percent below the volume the group generated in the first three months of 2017. Correspondent production remained the biggest source of FHA/VA loans, accounting for 53.5 percent of the survey sample in the first quarter. But production through this channel was down 22.2 percent from the previous three-month period, a slightly larger decline than seen overall. Four of the top five lenders in the group have strong correspondent platforms, especially ... [Chart]

President Trump this week announced Michael Bright as his choice to lead Ginnie Mae, an agency under the Department of Housing and Urban Development, even as Senate Democrats continued to delay vote on his nominee for FHA commissioner. Bright is currently Ginnie Mae’s executive vice president and chief operating officer, though he has been serving as acting president since Theodore Tozer stepped down on Jan. 20, 2017. Tozer served as Ginnie president under the Obama administration for nearly seven years. Bright joined Ginnie on July 11, 2017. Previously, he served as director for financial markets at the Milken Institute and as senior vice president of BlackRock/PennyMac. During his time with Milken, Bright co-authored a paper with Ed DeMarco, former acting director of the Federal Housing Finance Agency and currently president of the Financial Services Roundtable, which proposed to ...

With overall production levels falling, there was a modest increase in several risk vectors of FHA and VA loans pooled in Ginnie Mae mortgage-backed securities during the first quarter of 2018.A new Inside FHA/VA Lending analysis shows the average credit score for FHA loans in Ginnie MBS issued during the first quarter was 671.1, the lowest level since Ginnie began reporting loan-level data on its securities. That was down from 673.2 in the fourth quarter and 679.2 a year ago. Part of the slide in FHA credit scores likely reflects the increased share of purchase mortgages, which typically have lower scores than refinance loans. The same thing happened in the VA market, where average credit scores fell 1.1 points to 707.8 in the first quarter. A year ago, the average VA score was 710.2. Debt-to-income ratios also drifted higher, suggesting more risk of default. Among FHA loans, the average DTI rose to ... [Charts]

An approved issuer suspended last month due to alleged VA loan churning activities is back in Ginnie Mae’s multi-issuer mortgage-backed securities program. Nations Lending, ranked 97th in Inside FHA/VA Lending’s top 100 VA lenders, was reinstated after reaching a confidential agreement with Ginnie Mae, according to a source familiar with the case. The Ohio-based lender has been “fully reinstated and [again] able to use all of Ginnie Mae’s programs that are available for lenders in good faith,” said the source, who asked not to be identified. The source declined to provide details of the agreement, maintaining Nations has been very transparent and was “ahead of the curve” in terms of dealing with the churning problem. “Nations began addressing the issue even before Ginnie took action,” he said. Ginnie neither confirmed nor commented on the report. “The evidence will show what is happening in the ...

The Department of Veterans Affairs home-loan guaranty program continued to account for most of the growth in the Ginnie Mae servicing business during the first quarter of 2018, a new Inside FHA/VA Lending analysis reveals. Total Ginnie mortgage-backed securities outstanding rose to $1.940 trillion as of the end of March, including multifamily MBS and securities backed by FHA reverse mortgages. Some $1.795 trillion of that amount was traditional single-family mortgages, a 1.1 percent increase from the end of last year. The forward-mortgage Ginnie market grew by 7.3 percent over the past 12 months. The amount of VA loans in Ginnie pools was up 13.1 percent from March 2017, nearing the $600.0 billion mark. By comparison, the FHA segment of the Ginnie market was up 4.7 percent from a year ago, hitting $1.085 trillion. Loan performance generally improved in both the ... [Charts]

Ginnie Mae is considering a tiered rating system to ensure that all participants in its mortgage securities program have sufficient liquidity and capital to meet their counterparty obligations. The agency is still fleshing out the idea of an “A-tier” issuer, which would likely develop into a policy in the near future, said Michael Bright, executive vice president and chief operating officer, during a recent interview with Inside FHA/VA Lending. “An A-tier issuer would be [a company that] has gone above and beyond in helping put together for us a risk management and liquidity plan that does not rely on liquidity providers, and whose defect and cure rates are low,” he explained. Such issuer/servicers also would be well capitalized. Ginnie is developing the metrics for such a system, as well as incentives for the A-tier issuers, Bright said He added that top-rated firms would be eligible for “concierge services” from the ...

Issuance of new single-family Ginnie Mae mortgage-backed securities fell sharply in the first quarter of 2018, according to a new Inside FHA/VA Lending ranking and analysis. The agency issued $92.58 billion in MBS backed by forward mortgages during the first three months of 2018. That was down 14.8 percent from the previous three-month period and represented the lowest quarterly total since early 2015. The 1Q figure is based on truncated loan amounts reported in Ginnie’s loan-level MBS disclosures. Reports with unrounded single-family loan amounts show a total of $95.75 billion in first-quarter MBS issuance, including FHA reverse mortgages. The loan-level data reveal that production fell 6.9 percent from February to March, when just $28.21 billion of Ginnie single-family securities were issued. That was the lowest monthly volume since February 2015. Both the FHA and VA programs saw significant ... [Charts]