Ginnie Mae will be working with FHA, VA and the U.S. Department of Agriculture to standardize origination policies and requirements for digital mortgages as it moves into the digital age of its secondary market business. Ginnie will coordinate with the agencies while developing technical standards for electronic closings, digital mortgage instruments and electronic vaults. All this work is part of the agency’s three-year strategy, Ginnie Mae 2020, to modernize its mortgage-backed securities program and platform, strengthen its counterparty risk management capability, and explore new ways to lower or eliminate risk from the system. As part of the modernization effort, Ginnie envisions a process that would allow it to accept digital promissory notes and other digitized loan files as eligible collateral for its MBS. It would encompass loan application through securitization. The plan calls for gradual implementation of ...

FHA purchase loan originations, which comprise the bulk of the agency’s business, declined during the first quarter of 2018 as mortgage interest rates continued to rise. Approximately $34.8 billion in FHA-insured purchase mortgages were made during the first three months, down 13.5 percent from the previous quarter. Purchase originations also fell 12.0 percent year-over-year, data showed. Purchase loans accounted for 71.1 percent of all FHA loans made to consumers in the first quarter. Fairway Independent Mortgage Corp. led all lenders with $880.8 million. This week, the benchmark 30-year fixed-rate mortgage rose by 1 basis point to 4.71 percent from last week, according to Bankrate’s weekly survey of large lenders. Four weeks ago, the rate was 4.64 percent. Over the past 52 weeks, the 30-year fixed has averaged 4.31 percent, Bankrate added. This week’s rate is 40 basis points higher than the ... [Charts]

Ginnie Mae will soon require issuers to undergo stress testing to see if they have the financial strength to withstand adverse circumstances or a severe economic downturn.The agency said it will soon begin phasing in stress testing, which would play a key role in issuer oversight and liquidity. The initiative is part of Ginnie’s effort to enhance the management of counterparty risk, one of the so-called three pillars of progress underlying the agency’s 2020 initiative. In addition to stronger risk management, the initiative aims to make significant technological improvements by 2020 and explore new opportunities to strengthen Ginnie’s MBS program. Issuers that meet the thresholds for required ratings will probably be the first ones to be stress tested, the agency said. Ginnie is also looking for ways to evaluate exposure to a single counterparty, relative to the counterparty’s financial health and the value of ...

Department of Housing and Urban Development Secretary Ben Carson reiterated concerns raised previously by his deputies regarding certain lending trends that could potentially endanger FHA’s financial health. Testifying during a HUD oversight hearing in the House Financial Services Committee this week, Carson said the department is scrutinizing certain policies that may be causing or contributing to the growth of cash-out transactions, unusually high debt-to-income ratios, serious loan delinquencies and early payment defaults. Carson said maintaining the health of the FHA mortgage insurance fund is critical in maintaining the agency as a source of credit for first time, low- and moderate-income, and minority homebuyers. The share of cash-out among all of FHA’s refinance transactions has increased to 60 percent as of April 2018 from 45 percent a year ago, he said. Also during that ...

The mortgage banking industry is backing a legislative proposal that would limit the government’s use of the False Claims Act to pursue hefty damages against FHA lenders. In a recent letter to the bill’s co-sponsors, the Mortgage Bankers Association expressed its strong support for H.R. 5993, the Fixing Housing Access Act of 2018. The MBA noted that originating FHA-insured loans has become very risky in recent years largely due to the civil actions brought by the Department of Justice under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. Fifty-four FCA and FIRREA cases against financial institutions have settled for billions of dollars between July 2011 and January 2018, according to data compiled by the Buckley Sandler law firm. Four cases are pending and one civil penalty award was reversed on appeal. Those lenders who were on the ...

Ginnie Mae has added a new metric to make it easier for approved issuers to track the prepayment rates of single-family loans underlying they have delivered into mortgage-backed securities. The new prepayment metric would enhance Ginnie’s Issuer Operational Performance Profile (IOPP) tool, which was launched in 2015 to help issuers measure their performance against the agency’s standards. The new tool is the latest move by Ginnie to ensure the integrity and market predictability of Ginnie MBS. The prepayment tool will be available to lenders beginning June 25. The announcement follows an agency administrative action last week against three VA lenders that were penalized for cherry picking and refinancing unseasoned VA loans not to benefit borrowers but to charge them higher fees. The lenders – Freedom Mortgage, SunWest Mortgage Co. and NewDay USA – were among nine issuers that ...

Now that Housing and Urban Development Secretary Ben Carson has sworn in a new FHA commissioner, reverse mortgage lenders are hoping to see some changes in the Home Equity Conversion Mortgage program. The National Reverse Mortgage Lenders Association is planning to ask FHA Commissioner Brian Montgomery for changes in the HECM program, particularly at the back end, to make it more profitable for lenders. Peter Bell, the group’s chief executive officer, believes there are opportunities to reduce the cost of the HECM program to the FHA fund by having better servicing procedures. “We would like to see certain loss mitigation procedures in the new HECM rules to be made available to all reverse-mortgage loans,” he said. Some of those procedures apply only to loans originated on or after the new rules became effective, such as “cash for keys.” Cash for keys is a cash offer by a lender to a ...

Reverse mortgage lenders started out strong in the first three month of 2018 with a 19.2 percent increase in Home Equity Conversion Mortgage production from the previous period. HECM endorsements totaled $5.4 billion in the first quarter, with purchase reverse loans accounting for the bulk of originations, 81.9 percent. First quarter production was up 18.5 percent from the same period last year. Meanwhile, HECM mortgage-backed securities issuance totaled $2.97 billion for the quarter, down from $3.25 billion in the prior quarter, Ginnie Mae data showed. The top five HECM originators in sequential order – American Advisors Group, Reverse Mortgage Funding, One Reverse Mortgage, Liberty Home Equity Solutions, and Synergy One Lending – accounted for $1.66 billion, or 30.8 percent, of total production during the first quarter. American Advisors maintained its top ranking with $841.4 million of HECM loans, which ... [Charts]

Industry trade groups are shopping lists of FHA priorities following last week’s Senate confirmation of Brian Montgomery as FHA commissioner and assistant secretary of housing at the Department of Housing and Urban Development. On May 23, the full Senate voted 74-23 to clear the former FHA commissioner for a return engagement after resolving a partisan block on all of President Trump’s nominees for top positions at HUD. Twenty-five Democrats joined 49 Republicans in approving Montgomery. He served as FHA commissioner under both the George W. Bush and Obama administrations. Montgomery was nominated initially in September 2017 and was approved by the Senate Banking Committee on Nov. 28 by an 18-5 vote. Under Senate rules, his nomination was returned to the president at the end of 2017. Montgomery was re-nominated in early January and was again approved by the ...

Officials at the government’s mortgage programs said that major investments in technology will make their programs more efficient and pay for themselves, during a panel session at the Mortgage Bankers Association secondary market conference last week in New York. Michelle Corridon, deputy director in the single-family housing guaranteed loan division of the U.S. Department of Agriculture, said her program’s focus now is on infrastructure and innovation. The USDA is instituting a technology fee on every closed loan starting in October, she said. The enhanced online system will include new screens for housing, which now shares a landing page with other rural programs. When it’s complete, the new system will handle the process from guaranty commitment through loan delivery. In another efficiency move, rural housing is “rolling up” processing chores to fewer offices so it doesn’t have ...