The Consumer Financial Protection Bureau last year logged 988 servicemember complaints related to the origination and servicing of VA and FHA mortgages. CFPB data showed VA outscored FHA on the number of complaints, 740 to 248, respectively, in 2017. The top five reasons for servicemember complaints were trouble during the payment process, difficulty in paying the mortgage, loan servicing, applying for a purchase mortgage or refinance, and closing a loan. Other complaints were about loan modification and foreclosure, mortgage brokers, incorrect information, settlement process and costs, underwriting/credit decision, credit-reporting company’s investigation of a consumer problem, and improper use of a credit report. Abusive practices related to loan churning might not be reflected clearly in servicemembers’ complaints in 2017 compared to the previous year, but a deeper dive into the ... [Chart]

Ginnie Mae is expanding its guidelines to clarify the amount of risk it considers acceptable for an issuer’s mortgage servicing rights portfolio and what administrative actions an issuer with excessive portfolio risk could face. The move is part of the agency’s continuous monitoring of issuer activity and MSR portfolios to ensure they are not putting issuers, investors or the program at risk. In its revised MBS Guide, Ginnie provides examples that fall outside of the acceptable risk parameters. Issuers deemed to carry excessive risk will find their participation in the MBS program greatly restricted, the agency warned. In addition, Ginnie may require offenders to recalibrate their high-risk portfolio to more acceptable risk levels, diversify their portfolio, or restrict their participation in Ginnie’s co-issue program, Pool Issues for Immediate Transfer (PIIT) and/or multiple pools. Ginnie is urging issuers to review the ...

The Senate Committee on Banking, Housing and Urban Affairs has reapproved the nomination of Brian Montgomery to lead the FHA even as Democrats reiterated their concerns about the candidate. The committee favorably reported Montgomery’s nomination previously in November by an 18-5 vote. The Senate, however, was unable to confirm the nominee for the post before the end of the legislative year. In order to be considered again for the post, Senate procedures required Montgomery to resubmit his financials and again wait for a full Senate vote. Five Democrat senators on the committee – Ranking Member Sherrod Brown (OH), Elizabeth Warren (MA), Jack Reed (RI), Catherine Cortez Masto (NV), and Brian Schatz (HI) – objected to the Montgomery nomination because they perceived him as “too close” to the mortgage industry. Brown expressed concern about Montgomery’s intention to ...

President Trump this week signed a short-term spending bill that would keep the government operating until Feb. 8, 2018. The bill ended a three-day shutdown after the previous spending authority for most of the government expired at midnight on Jan. 19. However, the threat of another shutdown looms. FHA and Ginnie Mae both had contingency plans in place in case the short-lived shutdown dragged on, as it had in 2013. That event lasted for 16 days, at a loss of $1.6 billion a day to the federal government. Under FHA’s emergency plan, the agency would continue to endorse new single-family forward mortgages, but not Home Equity Conversion Mortgages and Title I loans. Ginnie would reduce staffing to essential personnel but continue its secondary market operations. It would continue to remit timely payment of principal and interest to investors, grant commitment authority and support issuance of ...

Ginnie Mae set records for new issuance of single-family mortgage-backed securities in 2015 and 2016, but production sagged last year, according to a new analysis and ranking by Inside FHA/VA Lending. The agency issued $443.20 billion of MBS backed by forward single-family mortgages in 2017, a 10.8 percent decline from the previous year. Including FHA reverse mortgages and that are not truncated, 2017 issuance fell 10.3 percent to $455.00 billion. Meanwhile, the private mortgage insurance business – based on Fannie Mae and Freddie Mac MBS data – saw a smaller decline of 5.0 percent from 2016 to last year. The VA program generally held up better than the FHA program during the fourth quarter, when refinance lending was climbing. But the FHA had a better year overall despite some loss of market share in purchase-mortgage activity. Deliveries of FHA loans into ... [ Charts ]

Senate lawmakers this week introduced bipartisan legislation to protect veterans and servicemembers from predatory refinancing schemes. Introduced by Sens. Tom Tillis, R-NC, and Elizabeth Warren, D-MA, the bill would require lenders offering streamline or cash-out refinancing to demonstrate a material benefit to veterans with a VA loan. The Protecting Veterans from Predatory Lending Act reflects measures Jeffrey London, director of VA’s Loan Guaranty Service, talked about when he testified during a hearing on loan churning before the House Veterans Affairs Subcommittee on Economic Opportunity (See next story.) Prior to submitting a refi loan for a VA guarantee, a lender would be required to certify that all fees associated with the transaction would be recouped by the veteran through lower monthly payments within 36 months. Such fees would include closing costs and any expenses other than ...

Ginnie Mae and the Department of Veterans Affairs have announced additional measures to curb serial refinancing of VA loans. Testifying before a House Veterans Affairs subcommittee this week, officials from both agencies said the latest measures will complement guidelines Ginnie issued last year to deal with the loan-churning problem. Lenders urged Congress and the two agencies to be cautious in prescribing fixes that could potentially cut off VA funding. Jeffrey London, director of the VA Loan Guaranty Service, said a proposed rule that includes a net tangible benefits test for veterans as well as seasoning and recoupment requirements will be issued soon. The VA is also planning to require upfront lender disclosure of the terms and benefits of a streamline or cash-out refi, including the recoupment period of the new transaction. Even though serial refinancing is not systemic to the VA portfolio, it has grown in ...

2018 might not turn out to be a record-breaking production year for FHA and VA, but it could become significant in terms of enforcement and housing finance reform, according to industry stakeholders. Ed Pinto, codirector of the American Enterprise Institute’s International Center on Housing Risk, expects a slight increase in FHA’s and VA’s mortgage unit production and stronger dollar volumes due to rising house prices. Pinto believes loose purchase lending, particularly by FHA, and declining housing inventory are driving housing prices. This in turn results in FHA/VA cash-out refinancing at very high loan-to-value ratios, which helps feed the general economy but makes FHA lending riskier, he said. “We see a stronger demand for housing amid constrained housing supply,” said Pinto. “We’re seeing this vicious cycle of purchase transactions becoming more risky, cash-out transactions increasing in ...

Ginnie Mae’s latest efforts to rein in serial VA refinancing and rapid prepayments in mortgage-backed securities pools augur additional changes to pooling and refi requirements at Ginnie and the Department of Veterans Affairs, analysts said.

New pooling restrictions announced last week by Ginnie Mae to curb churning and prepayment speed spikes are likely a precursor to future changes in pooling and refinancing policies at Ginnie and the Department of Veterans Affairs, according to analysts.