Ginnie Mae this week meted penalties to two of the nine issuers that received warnings from the agency for excessive refinancings of VA mortgages. Bloomberg reported that Ginnie barred NewDay Financial’s and Nations Lending’s from the more lucrative multi-issuer mortgage-backed securities pools, forcing them to issue custom pools. The restrictions became effective immediately. The agency’s action could reduce mortgage interest rates by 50 basis points for FHA and VA loans, which would benefit first-time homebuyers, said Jaret Seiberg, an analyst with Cowen Washington Research Group. On the other hand, the issuers Ginnie limited to issuing custom pools will end up making loans with higher rates, the analyst noted. Ginnie’s action is part of a joint effort with the Department of Veterans Affairs to crack down on loan churning and faster prepayments of VA loans pooled in Ginnie securities. Loan churning ...

Ginnie Mae’s anti-churning efforts have narrowed the spread between Ginnie and Fannie Mae mortgage-backed securities, prompting executives to say things are almost back to normal. In an interview with Inside FHA/VA Lending this week, Michael Bright, executive vice president and chief operating officer at Ginnie Mae, said the market and investors have responded positively to the agency’s efforts to resolve the churning and prepayment problems. “The Ginnie spread has fallen almost half a point and our securities have become more liquid,” he said. “We want to make sure we’re giving investors CPRs (constant prepayment rates) that they can model.” Bright said he cares less about the overall level of prepayment speeds. What he truly cares about is ensuring that when an investor purchases a Ginnie security, the prepay speed is correlated to changes in the interest rates and not the ...

FHA streamline refinancing fell significantly in 2017 from the previous year, according to an Inside FHA/VA Lending analysis of agency data. Lenders closed 2017 with $37.4 billion of FHA streamline refi loans, buoyed by a 12.2 percent increase in origination in the fourth quarter. However, business was down a whopping 34.5 percent year-over-year. The segment ended the first quarter strongly with, $13.05 billion, but faltered over the next nine months. Streamline refinancing accounted for 15.8 percent of total FHA originations in 2017. Twelve states, led by California, each reported FHA streamline refi originations in excess of $1 billion last year. The Golden State closed the year with $8.05 billion of FHA-to-FHA refis, which accounted for 21 percent of all FHA loans in the state last year. The highest FHA streamline refi-producers after California were, in sequential order, ... [Charts]

Ginnie Mae’s credit-risk sharing concept is generating a lot of excitement among private credit enhancers, according to the company’s acting president. A planned risk-sharing pilot with FHA scheduled for later this year has the industry on its toes, said Michael Bright, executive vice president and chief operating officer of Ginnie Mae, during an interview this week with Inside FHA/VA Lending. “There is a line out the door of private companies willing to provide and take on credit risk and work with us on transactions where private capital would assume some of the risk,” he said. Ginnie is currently looking at ways to facilitate risk sharing between FHA and a private third party that would assume a first-loss position on a Ginnie security backed by FHA loans. Bright brought up the idea during remarks at the Structured Finance Industry Group conference in Las Vegas in February. He has been fielding calls since from ...

Two of the nine MBS issuers that Ginnie Mae singled out for unusual MBS prepayment speeds reportedly have been restricted from the agency’s multi-issuer MBS pools.

Ginnie Mae has passed the $1 billion mark for mortgage-backed securities issued through the Federal Home Loan Banks’ Mortgage Partnership Finance program. The MPF government MBS product was available initially to eligible participating members of the Federal Home Loan Bank of Chicago. The Chicago FHLB launched the MPF program in 1997 to give approved participating members access to the secondary mortgage market. Specifically, the program provided an outlet other than Fannie Mae and Freddie Mac for member institutions to sell fixed-rate mortgage loans (conventional, government, or jumbo). Most of the institutions participating in the MPF are small banks, thrifts and credit unions with assets of less than $400 million. The MPF government MBS product arose from a 2015 partnership between Ginnie Mae and the Chicago FHLB to issue Ginnie MBS backed by ...

Securitization of USDA loans by Ginnie Mae fell in the fourth quarter of 2017. Approximately $19.9 billion of USDA loans were delivered into Ginnie MBS pools in 2017, notwithstanding a 9.2 percent drop from the previous quarter, agency data show. On the other hand, year-over-year securitization of rural housing loans with a government guarantee rose 5.8 percent from 2016. Top-ranked Freedom Mortgage saw its USDA loan deliveries to Ginnie drop 16.2 percent during the fourth quarter, while its USDA securitization volume rose a whopping 78.9 percent from the previous year. Overall, Freedom accounted for $3.6 billion of USDA loans pooled in Ginnie MBS last year. Second-place PennyMac closed the year with $3.1 billion of securitized USDA loans, while Wells Fargo reported a 13.1 percent drop in the final quarter to end 2017 with $1.4 billion of rural housing loans in Ginnie MBS. Chase Home Finance sprang out ... [ Chart ]

Overall production of government-insured loans fell in all three origination channels in the fourth quarter as refinancing continued to decline in 2017. A survey of FHA, VA and rural housing lenders showed originations in retail, correspondent and broker conduits totaled $248.9 billion, down 11.8 percent from 2016. Correspondent production suffered the biggest quarterly decline, 14.9 percent from the third to the fourth quarter. Production in this channel also declined 4.8 percent for the full year. Approximately $139.3 billion of FHA and VA loans came through this channel last year. Notwithstanding the decline, the correspondent share of government-insured lending grew to 56.0 percent in 2017, up from 51.9 percent in 2016. Brokers saw their share of the government-insured market rise to 10.0 percent, even as quarterly and year-over-year originations declined by 2.0 percent and 10.7 percent ,,, [ Charts ]

The Department of Housing and Urban Development and the Federal Deposit Insurance Corp. have announced offerings of multiple residential reverse mortgage pools for sale to investors. The HUD pools are comprised of approximately 650 reverse mortgage notes with a total loan balance of about $136 million. The sale consists of due and payable first-lien reverse mortgages secured by single-family, vacant residential properties where all borrowers are deceased and none is survived by a non-borrowing spouse. The reverse-mortgage sale is the third offering of its type. As with past offerings, the sale will be by competitive bidding on April 11, 2018. The loans will be sold without FHA insurance and with servicing released. The loans are expected to be offered in regional pools. Meanwhile, the FDIC will unload in open auction 3,280 FHA-insured reverse-mortgage loans from the ...

Accounting firm Deloitte & Touche has agreed to pay the federal government $149.5 million to settle False Claims Act liabilities arising from its audits of failed FHA lender Taylor, Bean &Whitaker Mortgage Corp.Deloitte was TBW’s independent outside auditor from 2002 through 2008, when the subprime mortgage market unraveled, triggering a financial and housing crisis. The Department of Justice alleged that, during the period in question, TBW had been running a fraudulent scheme involving the purported sale of fictitious or double-pledged mortgages. According to court documents, Lee Bentley Farkas, former chairman of TBW, and six other banking executives engaged in a more than $2.9 billion fraud scheme that contributed to the failures of Colonial Bank and TBW. Farkas and his crew allegedly misappropriated in excess of $1.4 billion from Colonial Bank’s warehouse lending division in Orlando, FL, and approximately $1.5 billion from Ocala Funding, a mortgage-lending facility controlled by TBW.