Ginnie Mae is considering a risk-sharing pilot that would have private capital absorb some of the potential losses on FHA loans securitized through the agency. In remarks at the Structured Finance Industry Group conference in Las Vegas recently, Michael Bright, executive vice president and chief operating officer with Ginnie, said no decision has been made on any credit-enhancement structure, as consultations with stakeholders are still ongoing. “We are actively looking at structures we can put in place where we bring in private capital to provide a [partial] guarantee,” explained Bright, Ginnie’s acting president. “The FHA is going be involved in a lot of them.” A risk-share partnership between FHA and private credit enhancers not only would protect the Mutual Mortgage Insurance Fund but reduce taxpayer risk as well, observers said. The risk-sharing concept would have private mortgage insurers assuming ...

Ginnie Mae is considering changes to the existing pledge agreement that allows mortgage-backed securities issuers to borrow against servicing rights. Revising the acknowledgement agreement between Ginnie, issuers and third-party creditors would ensure that nonbank participants would have sufficient liquidity to make timely payments to investors, said Michael Bright, executive vice president and chief financial officer of Ginnie Mae. In remarks at the recent Structured Finance Industry Group conference in Las Vegas, Bright said the change aims to strengthen Ginnie’s ability to oversee its issuer base, which has shifted from large regulated banks to mostly unregulated nonbanks. Nonbanks filled the void after a contingent of large banks exited the FHA market due to concern about the government’s use of the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act in ...

The volume of FHA and VA loans securitized in Ginnie Mae pools in 2017 declined from the previous year, according to an analysis of agency data. FHA loans delivered into Ginnie mortgage-backed securities last year totaled $250.5 billion, down 8.7 percent from 2016. Purchase loans comprised 69.6 percent of Ginnie MBS issuances backed by FHA loans over the 12- month period, while refinances accounted for 24.8 percent. FHA borrowers had an average FICO score of 675.3, suggesting a more traditional borrower base of first-time homebuyers and borrowers with credit issues. The FHA loans that were securitized had an average loan-to-value ratio of 92.8 percent and a debt-to-income ratio of 41.3 percent. California led all states in FHA mortgage securitization, with $39.0 billion for all of last year. FHA originations, however, dropped 16.6 percent year-over-year. The other top states in terms of ... [ charts ]

FHA and VA single-family originations fell in the fourth quarter of 2017 due to a decline in purchase mortgage originations that was offset somewhat by an increase in refinance business. FHA endorsed $237.3 billion in forward single-family mortgages in 2017 notwithstanding an 11.9 percent drop in the fourth quarter. FHA production also dropped 7.1 percent year-over-year. Market observers attributed the decline in FHA originations to high mortgage insurance premiums, stiffer competition from private lenders’ low-downpayment programs, and a more aggressive conventional-conforming mortgage market. A new analysis by Inside Mortgage Finance also found that government-backed lending and the jumbo market saw the biggest production declines from the prior quarter. In particular, IMF’s research found that FHA, VA and U.S. Department of Agriculture rural-housing originations fell ... [Charts]

Analysts are monitoring prepayment speeds to see if Ginnie Mae’s efforts to curb serial refinancing or loan churning are having an impact. Wells Fargo Securities analysts said a conversation about churning has started with a handful of Ginnie mortgage-backed securities issuers, which “should be a net benefit for MBS,” especially for higher coupons where outlier speeds are most prevalent. In a recent alert, the analysts said the momentum continues to build to curb churning of VA loans following notification of lenders suspected of engaging in the activity. Nine issuers have received written warnings based on unusual prepayment rates in VA-backed MBS. Such deviations from market norms for an extended period are not acceptable because they put veterans’ earned benefits at risk, the agency said. The outliers were discovered after a comprehensive review of issuer performance and ...

Issuers Ginnie Mae had targeted for allegedly churning VA loans have denied engaging in the practice. Flagstar Bank and NewDay Financial said they have policies and procedures to prevent churning, or serial refinancing, but offered no explanation as to why they were on Ginnie’s list. Both companies were among the nine issuers Ginnie notified earlier this month for performance that “is materially worse than its peers as to be an outlier.” The agency made its determination after analyzing pool characteristics of all issuers. The analysis revealed an unusually higher prepayment rate for securitized VA loans over a long period for all nine issuers compared to other issuers. “Under the analysis, [a] handful of issuers was shown to be consistent material outliers over an extended period,” said Ginnie. “The [review] identified market participants whose pool performance clearly and persistently deviates from ...

The Trump administration is seeking additional budget allocations in FY 2019 for FHA and Ginnie Mae to pay technology upgrades, additional staffing, and increased issuer oversight. The budget request seeks an additional $20 million above the 2017 enacted level of $130 million for FHA to upgrade its aging information technology – some still based on the antiquated COBOL programming language – and contract support. The additional funding would be offset by charging lenders an IT fee of no more than $25 per loan, according to the proposed budget for the Department of Housing and Urban Development. In addition, the 2019 HUD budget requests $400 billion in new loan guarantees under the Mutual Mortgage Insurance Fund for forward single-family mortgages Home Equity Conversion Mortgages, multifamily housing, and manufactured housing. The requested $400 billion would remain available ...

FHA is offering new options to victims of hurricanes Harvey, Irma and Maria as well as California wildfires and subsequent flooding and mudslides to avoid foreclosures. Eligible disaster victims in Texas, Louisiana, Georgia, Florida, South Carolina, California, Puerto Rico and the U.S. Virgin Islands may get FHA foreclosure relief, which would allow them to remain in their homes and, at the same time, reduce losses to the mortgage insurance fund. FHA has instructed servicers to reach out to the victims with the new option, “Disaster Standalone Partial Claim.” The new option allows an interest-free second loan to cover up to 12 months of missed mortgage payments. The loan is payable only when the borrower sells the home or refinances the mortgage. The expanded loss mitigation will also streamline income documentation and other requirements to expedite relief to struggling homeowners while they are ...

IG Looking into Role Secretary’s Family Plays at HUD. The Department of Housing and Urban Development’s inspector general is looking into the role members of Secretary Ben Carson’s family have played at the agency, CNN reported this week. According to the report, Carson himself called for the IG review following an earlier Washington Post report that HUD officials are raising ethics questions about the activities of Carson’s son and daughter-in-law at the agency, including helping to organize a listening tour for the new secretary in Baltimore last year. HUD’s lawyers reportedly warned Carson of a potential violation of federal ethics rules, according to an internal memo the Post obtained through the Freedom of Information Act. Ginnie Mae MBS Outstanding Increases to $1.9 Trillion. Ginnie Mae’s mortgage backed-securities issuance totaled $36.4 billion in January, which included ...

The severe hurricanes that tormented a handful of markets during late summer of 2017 continued to push FHA default rates higher in the fourth quarter, a new Inside FHA/VA Lending analysis reveals. The number of FHA loans paying on time fell from 92.8 percent at the end of September to 91.9 percent at the end of the fourth quarter. Most of the deterioration took place in the more severe default categories. The number of FHA loans 90 days past due more than doubled during the three-month period, climbing to a hefty 0.92 percent of outstanding loans. And the number of FHA loans more than three-payments late increased by 39.7 percent, reaching 1.01 percent of the total outstanding. Three jurisdictions that bore the brunt of hurricanes Harvey, Irma and Maria – Texas, Florida and Puerto Rico – saw huge increases in FHA defaults. Puerto Rico saw a devastating impact in rising ... [Charts]