Information technology improvement is the top priority of government lending programs in the coming months and into 2019. Agency representatives at the Mortgage Bankers Association’s annual convention in Washington, DC, said policy changes are in the works to enhance and improve operations, compliance and customer service. FHA Commissioner Brian Montgomery, who joined the agency four months ago, said IT modernization is his primary concern. A state-of-the-art IT system and advanced data analytics are needed to manage FHA exposures effectively, he said. Montgomery made clear FHA has no plans to build a proprietary system but is considering the idea of shared technology, possibly with VA and USDA; something based on Fannie Mae’s and Freddie Mac’s systems; or some off-the-shelf software. In his view, a modern IT system would have automated underwriting that provides ...

Ginnie Mae has made considerable progress in dealing with rapid prepayments on VA loans but prepayment speeds on Ginnie mortgage-backed securities in general continue to annoy investors. Prepay speeds on Ginnie MBS are now at the lowest since 2014 but it is not enough for agency Executive Vice President Maren Kasper to feel confident as she addressed the annual convention of the Mortgage Bankers Association this week. “Our prepayment issue is not solved,” said Kasper, as she spoke on a panel with representatives of government-lending programs. The agency continues to hear from investors about the problem, she said. Kasper cited two instances where Ginnie officials were summoned to meetings in China and New York to explain the prepayments to irate investors. They threatened to stop purchasing Ginnie bonds, she said. Kasper declined to say how bad the ...

Ginnie Mae issuance of single-family mortgage-backed securities rode a homebuying wave during the third quarter of 2018, according to a new Inside FHA/VA Lending ranking and analysis. Ginnie issuers produced $105.63 billion of new MBS backed by forward mortgages during the July-September cycle, a 7.1 percent increase from the second quarter. That brought year-to-date production to $296.88 billion – down 11.3 percent from the first nine months of 2017. Purchase mortgages provided the boost for the Ginnie market. Some $75.69 billion of FHA and VA purchase mortgages were pooled in Ginnie MBS in the third quarter, a sturdy 13.1 percent increase from the previous period. Purchase loans accounted for 75.1 percent of FHA and VA loans securitized in the third quarter, compared to 64.7 percent for all of last year. Although production of these loans has gone up since the first quarter, year-to-date volume ... [Charts]

The reverse mortgage industry is supporting an FHA move to require a second appraisal for certain Home Equity Conversion Mortgage loans. FHA did not seek public comment on the interim policy change, which subjects all HECM loans, effective Oct. 1, to a collateral risk assessment to ensure the appraisal of the property is not inflated. The new policy has wide support in the reverse mortgage industry. A study conducted by the Department of Housing and Urban Development last year found that 37 percent of appraisals on approximately 134,000 HECMs tested positive for over-valuation. The inflated HECM appraisals were at least 3 percent higher than estimates by FHA’s proprietary automated valuation model, according to FHA Commissioner Brian Montgomery. The same study also found that higher-than-expected losses in the HECM program could be attributed in part to ...

The mortgage banking industry is optimistic about Congress enacting legislation that would cure VA orphan loans before the midterm elections. The U.S. Senate still has time to consider H.R. 6737, the Protect Affordable Mortgages for Veterans Act, according to Bill Kilmer, chief lobbyist at the Mortgage Bankers Association. “Most observers think [lawmakers are] going to be around until Oct. 18 or 19, which is when Senate Majority Leader Mitch McConnell said he wants to keep folks around to work on nominations and other measures they need to clear,” Kilmer said. “There is time and, more to the substantive point, the bill passed the House.” H.R. 6737 would provide a technical fix so that certain VA refinance loans would be eligible for pooling in a Ginnie Mae mortgage-backed security. The bill was reported out of committee by a unanimous 49-0 vote, and was approved quickly by the House ...

FHA Issues Waiver of Property Inspections in Disaster-Stricken California Counties. FHA has issued a waiver of its timing policy for completing property inspections prior to closing or endorsing a loan for FHA insurance. The waiver is in effect in presidentially declared major disaster areas in Lake and Shasta Counties, CA, that were ravaged by wildfires and high winds. FHA believes that the wildfires and high winds have stabilized so as not to cause any further damage to properties, even though FEMA has not declared “all clear” in the affected areas. The waiver allows damage inspections to be completed after Oct. 2, for properties located in the PDMDA. NC Commissioner of Banks Amends State Reverse Mortgage Rules. The North Carolina Commissioner of Banks recently amended its ...

Ginnie Mae assured the mortgage industry that it would accept so-called VA orphan loans as long as they satisfy the terms of corrective legislation passed by the House Financial Services Committee recently. “As long as the mortgage loan complies with the law, we will accept it and put our guarantee on it,” said an agency spokesperson in response to an Inside FHA/VA Lending inquiry. Ginnie’s assurance provides certainty to a subset of VA loans that have been in limbo since June because they could not be delivered into Ginnie mortgage-backed securities. Lawmakers responded to industry calls for a legislative fix last week by voting overwhelmingly to approve H.R. 6737, the “Protect Affordable Mortgages for Veterans Act of 2018.” Introduced by Rep. Lee Zeldin, R-NY, the bill would eliminate the seasoning requirements in the recently enacted Dodd-Frank Act reform legislation, which conflicted with ...

House Financial Services Committee Chairman Jeb Hensarling, R-TX, unveiled long-awaited legislation on government-sponsored enterprise reform that would enhance Ginnie Mae’s role in the secondary mortgage market. Hensarling referred to the bill – the Bipartisan Housing Reform Act of 2018 – as a “bipartisan compromise housing-reform plan” that preserves the government guarantee in the secondary mortgage market. The chairman collaborated with Rep. John Delaney, D-MD, in crafting the bill, which calls for the repeal of the federal charters of Fannie Mae and Freddie Mac. The bill would shift the secondary market to a system that allows pooling of qualified conventional mortgages backed by government-approved private guarantors with regulated capital. These loans could be pooled in mortgage-backed securities with explicit government guarantees provided by Ginnie. The new MBS program would be ...

Big Four accounting firm Deloitte has paid $149.5 million to the federal government to settle allegations of misconduct in connection with its role as the independent outside auditor of defunct FHA lender Taylor, Bean & Whitaker. The settlement amount includes $115 million in restitution paid to the Department of Housing and Urban Development on Aug. 13, 2018, according to the HUD inspector general. The rest of the payment went to the Department of Justice, which brought the charges on behalf of the government. Deloitte admitted neither to any liability nor to wrongdoing. TBW was an FHA direct endorsement lender and a Ginnie Mae-approved mortgage-backed securities issuer and servicer. It originated, underwrote, acquired and sold mortgages to Freddie Mac and other investors, which used the loans to support MBS issuance or held them as investments. In its heyday, TBW was one of the ...

Ginnie Mae issuers produced $36.68 billion of new single-family mortgage-backed securities last month, a modest 5.0 percent gain from July, according to a new Inside FHA/VA Lending analysis and ranking. Through the first eight months of the year, Ginnie issuance was down 11.0 percent from the same period in 2017. The MBS figures do not include FHA home-equity conversion mortgages, and loan amounts are truncated to the lowest $1,000. Purchase mortgages accounted for 75.6 percent of new issuance in August, although volume was up just 1.9 percent from July’s level. On a year-to-date basis, the purchase-mortgage share rose from 65.7 percent in 2017 to 70.0 percent for the first eight months of this year. Total volume, however, was down 5.1 percent. The refinance market has been more wobbly. As of the end of August, refi volume totaled $65.87 billion, down 26.2 percent from the ... [Chart]