HECM endorsement volume rose in the first quarter of 2019 after three quarters of declining originations. FHA attributed the increase to the partial government shutdown that lasted 35 days, delaying HECM endorsements for part of the first quarter.
The Structured Finance Industry Group is backing an FHA proposal to revise its annual loan-level certifications and defect taxonomy and a Ginnie Mae proposal on high-risk cash-out refinance loans and erratic prepayment speeds.
Many of the loans with lower credit scores and higher debt-to-income ratios that get flagged for manual underwriting under FHA’s revised Technology Open to Approved Lenders (TOTAL) Mortgage Scorecard likely will not get endorsed, analysts said. [Includes one data chart.]
In an effort to streamline its lending process, the FHA has scrapped the requirement of a 10-year protection plan for newly constructed single-family homes, according to guidelines released this week.
FHA lenders can now outsource verification of a borrower’s employment, income and other assets to third-party vendors. The new guidance, which came into effect on Feb. 15, applies to all FHA forward mortgages and Home Equity Conversion Mortgage loans.
FHA has tweaked its mortgage scorecard to address concerns surrounding loans with higher-risk characteristics such as cash-out refinances and high debt-to-income ratios.
Lenders will no longer be able to edit appraisals in FHA’s Electronic Appraisal Delivery portal. They will have to submit a corrected appraisal to update the field.
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