Financial Freedom, an Austin, TX-based servicer, agreed to an $89 million settlement with the U.S. Department of Justice to settle allegations that it violated the False Claims Act, the Financial Institutions Reform, Recovery, and Enforcement Act, and FHA servicing requirements in connection with its participation in FHA’s Home Equity Conversion Mortgages, or “reverse mortgage,” program. The Justice Department alleged that Financial Freedom sought to obtain insurance payments for interest from FHA “despite failing to properly disclose on the insurance claim forms it filed with the agency that the mortgagee was not eligible for such interest payments because it had failed to meet various deadlines relating to appraisal of the property, submission of claims to the Department of Housing and Urban ...

Nonbank lenders far out-produced depository institutions in originating FHA mortgages during the first quarter of 2017. A new Inside FHA/VA Lending analysis reveals that nonbank lenders produced over 83 percent of FHA forward loans endorsed during the first quarter. With over 8,000 entities listed as originators and sponsors in FHA loan-level data, the overwhelming majority of them were independent mortgage banks, mortgage brokers and other nonbank lenders. The 14 largest FHA originators were all nonbanks, led by Quicken Loans, Freedom Mortgage and loanDepot. One sign of the overwhelming fragmentation in the FHA primary market is the fact that these three lenders accounted for just 11.3 percent of first-quarter endorsements. The largest depository originator of FHA loans was PrimeLending, an affiliate of PlainsCapital Bank. It ranked 15th in production with a ... [charts ]

The Department of Veterans Affairs’ interim final rule on qualified mortgages (QM) implements the Dodd-Frank provision requiring creditors to make a reasonable and good faith determination that the borrower has a reasonable ability to repay the loan. The VA interim final rule defines QM to mean any loan that the agency guarantees, insures or originates. However, certain limitations apply to VA’s Interest Rate Reduction Refinance Loans (IRRRLs) in the rule’s guidance for “safe harbor.” Under the safe harbor requirements for an IRRRL, the loan being refinanced must have been originated at least six months before the new loan’s closing, and six payments must have been made. In addition, the veteran should not have been more than 30 days past due during the six months preceding the new loan’s closing. The QM rule’s six-month seasoning requirement, however, inadvertently created an ...

Appropriation levels for FHA and Ginnie Mae from the previous fiscal year were unchanged in the FY 2017 omnibus spending bill, which President Trump signed into law on May 5. The bill, which passed the House by a 309-118 vote and the Senate by a 79-18 vote on May 4, will fund the federal government through the rest of the fiscal year ending Sept. 30, 2017. Among other things, the bill allocates $400 billion to single-family guarantee commitments under the FHA Mutual Mortgage Insurance Fund, and provides $130 million for administrative contract expenses. In addition, the budget provides an additional $30 million if guaranteed loan commitments exceed $200 billion. The agreement also sets aside up to $30 billion for FHA multifamily and specialized loan guarantees during FY 2017. A total of $55 million was set aside for housing counseling programs, $65.3 million for fair housing activities, and $4 million to ...

With only days to go before the implementation of its new Loan Review System, the FHA is encouraging lenders to take a few more steps to ensure smooth transition to the new system. The LRS will go live on May 15, 2017, as the new electronic platform for FHA’s Title II single-family, quality-control processes. Lenders will use the LRS to interact with FHA during post-endorsement loan reviews, direct endorsement authority test cases, lender monitoring reviews and lender self-reporting of fraud and other material findings. Findings will be communicated through the system’s defect taxonomy, which provides a streamlined method of identifying and capturing information about defects uncovered during individual loan reviews. In its latest guidance, the FHA instructs lenders to check access to FHA Connection for any potential glitches. All users access the LRS through FHA Connection via the ...

Private mortgage insurers were the largest providers of insurance coverage on purchase loans securitized by the three agencies in early 2017, according to a new Inside Mortgage Finance analysis. Private MI coverage was attached to $40.08 billion of purchase mortgages securitized by Fannie Mae and Freddie Mac during the first quarter. That equaled 26.3 percent of total purchase business by the two government-sponsored enterprises and Ginnie Mae. The FHA provided...[Includes one data table]

Total issuance of agency single-family MBS rose a scant 0.6 percent from March to April, according to a new Inside MBS & ABS analysis and ranking. All of the increase came from Ginnie Mae issuance, which rose 16.1 percent from March, hitting $36.30 billion in April. Things were different for the two government-sponsored enterprises: Fannie Mae saw a 3.4 percent decline from the previous month and Freddie Mac volume was down 13.0 percent. Ginnie fared...[Includes two data tables]

Mortgage default rates for FHA and VA loans followed seasonal trends and shifted significantly lower in the first quarter of 2017, according to a new analysis and servicer ranking by Inside FHA/VA Lending. While both portfolios showed strong growth in the dollar volume of loans outstanding in Ginnie Mae mortgage-backed securities, there were also huge declines in the number of loans past due. Some $1.036 trillion of FHA forward mortgages were in Ginnie pools at the end of March, up 1.1 percent from the previous quarter. But delinquency rates for the less-severe categories of late payment were down sharply. The number of FHA loans 30-60 days past due, for example, declined by 28.4 percent, lowering the delinquency rate by 1.51 percentage points, leaving it just about where it was a year ago. The same thing happened in the VA sector. Total VA supply grew 3.2 percent to ... [Charts]

Production of new first-lien home mortgages fizzled in the first quarter of 2017 as the bottom fell out of the refinance market and home sales slumbered, according to a new Inside Mortgage Finance ranking and analysis. An estimated $385.0 billion of new first-lien mortgages were originated in the first three months of the year, a 33.6 percent downturn from the fourth quarter of 2016. It likely did not mark the end of the world, however. For starters, the fourth quarter of last year surprised on the upside – at $580.0 billion, it was the second-highest quarterly volume in the previous four years. And the start of 2017 was...[Includes two data tables]

The Department of Veterans Affairs is seeking comment on a proposal to ease restrictions on the allowable fees and charges military veterans may pay to obtain a VA home loan – a change that could make VA-backed financing more competitive in home purchases. The VA Loan Guaranty Service wants to hear from stakeholders as to how the agency can protect veterans from incurring excessive closing costs without being overly restrictive. Specifically, the VA is considering ways to revise the list of acceptable fees and charges that are impeding VA borrowers’ ability to compete against bidders using other home-purchase financing options that are not restricted by law or regulation. The VA rule on fees and charges has...