Legislation was introduced this week in the House Financial Services Committee that would strengthen oversight of FHA mortgage servicers to ensure their compliance with the agency’s loss-mitigation requirements. The FHA Foreclosure Prevention Act of 2018 (H.R. 5555) would require the Department of Housing and Urban Development to conduct servicer oversight, including sampling, compliance reviews, and direct information collection from borrowers whose files were sampled. “A decade after the devastating foreclosure crisis, we continue to see significant problems with the servicing of FHA loans that unnecessarily put homeowners at risk of foreclosure,” said Rep. Maxine Waters, D-CA, ranking member on the committee and sponsor of the bill. Waters said her bill would ensure that FHA servicers help families experiencing financial hardships avoid foreclosure so that they can ...

Issuance of new single-family Ginnie Mae mortgage-backed securities fell sharply in the first quarter of 2018, according to a new Inside FHA/VA Lending ranking and analysis. The agency issued $92.58 billion in MBS backed by forward mortgages during the first three months of 2018. That was down 14.8 percent from the previous three-month period and represented the lowest quarterly total since early 2015. The 1Q figure is based on truncated loan amounts reported in Ginnie’s loan-level MBS disclosures. Reports with unrounded single-family loan amounts show a total of $95.75 billion in first-quarter MBS issuance, including FHA reverse mortgages. The loan-level data reveal that production fell 6.9 percent from February to March, when just $28.21 billion of Ginnie single-family securities were issued. That was the lowest monthly volume since February 2015. Both the FHA and VA programs saw significant ... [Charts]

Ginnie Mae this week meted penalties to two of the nine issuers that received warnings from the agency for excessive refinancings of VA mortgages. Bloomberg reported that Ginnie barred NewDay Financial’s and Nations Lending’s from the more lucrative multi-issuer mortgage-backed securities pools, forcing them to issue custom pools. The restrictions became effective immediately. The agency’s action could reduce mortgage interest rates by 50 basis points for FHA and VA loans, which would benefit first-time homebuyers, said Jaret Seiberg, an analyst with Cowen Washington Research Group. On the other hand, the issuers Ginnie limited to issuing custom pools will end up making loans with higher rates, the analyst noted. Ginnie’s action is part of a joint effort with the Department of Veterans Affairs to crack down on loan churning and faster prepayments of VA loans pooled in Ginnie securities. Loan churning ...

Ginnie Mae’s anti-churning efforts have narrowed the spread between Ginnie and Fannie Mae mortgage-backed securities, prompting executives to say things are almost back to normal. In an interview with Inside FHA/VA Lending this week, Michael Bright, executive vice president and chief operating officer at Ginnie Mae, said the market and investors have responded positively to the agency’s efforts to resolve the churning and prepayment problems. “The Ginnie spread has fallen almost half a point and our securities have become more liquid,” he said. “We want to make sure we’re giving investors CPRs (constant prepayment rates) that they can model.” Bright said he cares less about the overall level of prepayment speeds. What he truly cares about is ensuring that when an investor purchases a Ginnie security, the prepay speed is correlated to changes in the interest rates and not the ...

FHA streamline refinancing fell significantly in 2017 from the previous year, according to an Inside FHA/VA Lending analysis of agency data. Lenders closed 2017 with $37.4 billion of FHA streamline refi loans, buoyed by a 12.2 percent increase in origination in the fourth quarter. However, business was down a whopping 34.5 percent year-over-year. The segment ended the first quarter strongly with, $13.05 billion, but faltered over the next nine months. Streamline refinancing accounted for 15.8 percent of total FHA originations in 2017. Twelve states, led by California, each reported FHA streamline refi originations in excess of $1 billion last year. The Golden State closed the year with $8.05 billion of FHA-to-FHA refis, which accounted for 21 percent of all FHA loans in the state last year. The highest FHA streamline refi-producers after California were, in sequential order, ... [Charts]

Ginnie Mae’s credit-risk sharing concept is generating a lot of excitement among private credit enhancers, according to the company’s acting president. A planned risk-sharing pilot with FHA scheduled for later this year has the industry on its toes, said Michael Bright, executive vice president and chief operating officer of Ginnie Mae, during an interview this week with Inside FHA/VA Lending. “There is a line out the door of private companies willing to provide and take on credit risk and work with us on transactions where private capital would assume some of the risk,” he said. Ginnie is currently looking at ways to facilitate risk sharing between FHA and a private third party that would assume a first-loss position on a Ginnie security backed by FHA loans. Bright brought up the idea during remarks at the Structured Finance Industry Group conference in Las Vegas in February. He has been fielding calls since from ...

FHA insured approximately $1.9 billion of ineligible mortgage loans made to borrowers with delinquent federal debts or who are subject to federal administrative offset for past-due child support payments, according to the Department of Housing and Urban Development’s inspector general. Approximately 9,500 loans were ineligible because the sources used by lenders to identify ineligible borrowers lacked sufficient information to raise red flags. In addition, FHA failed to guide lenders adequately in reviewing child support payments, the IG said. Federal law prohibits loans, loan guarantees or insurance to delinquent federal debtors, including those with delinquent child support subject to administrative offset, until the delinquency is resolved. Auditors drew a statistical sample of 60 loans from 13,927 FHA-insured loans that closed in 2016 and analyzed data on their related borrowers in the ...

The Department of Housing and Urban Development may need a huge cash infusion to modernize its antiquated information technology system, but Congress does not appear eager to provide the funding. Testifying before the House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies, HUD Secretary Ben Carson told lawmakers it would cost approximately $500 million to shift the agency’s archaic information technology system to the cloud. Carson said it is costing the department about $250 million annually to repair and maintain the legacy IT system, which is more than 40 years old. “We can keep patching and throwing away money or we can do what needs to be done and fix it for good,” he said. Subcommittee Chairman Mario Diaz-Balart, R-FL, appeared unfazed by Carson’s cost estimate but made no commitment during the ...

Ginnie Mae has passed the $1 billion mark for mortgage-backed securities issued through the Federal Home Loan Banks’ Mortgage Partnership Finance program. The MPF government MBS product was available initially to eligible participating members of the Federal Home Loan Bank of Chicago. The Chicago FHLB launched the MPF program in 1997 to give approved participating members access to the secondary mortgage market. Specifically, the program provided an outlet other than Fannie Mae and Freddie Mac for member institutions to sell fixed-rate mortgage loans (conventional, government, or jumbo). Most of the institutions participating in the MPF are small banks, thrifts and credit unions with assets of less than $400 million. The MPF government MBS product arose from a 2015 partnership between Ginnie Mae and the Chicago FHLB to issue Ginnie MBS backed by ...

Overall production of government-insured loans fell in all three origination channels in the fourth quarter as refinancing continued to decline in 2017. A survey of FHA, VA and rural housing lenders showed originations in retail, correspondent and broker conduits totaled $248.9 billion, down 11.8 percent from 2016. Correspondent production suffered the biggest quarterly decline, 14.9 percent from the third to the fourth quarter. Production in this channel also declined 4.8 percent for the full year. Approximately $139.3 billion of FHA and VA loans came through this channel last year. Notwithstanding the decline, the correspondent share of government-insured lending grew to 56.0 percent in 2017, up from 51.9 percent in 2016. Brokers saw their share of the government-insured market rise to 10.0 percent, even as quarterly and year-over-year originations declined by 2.0 percent and 10.7 percent ,,, [ Charts ]