Ginnie Mae this week barred loanDepot from securitizing VA loans in Ginnie Mae I and multi-issuer pools as part of its efforts to curb loan churning and rapid prepayments.

An outline for housing finance reform released late this week by Senate Banking Committee Chair Mike Crapo, R-ID, looks a lot like the last gasp reform proposal released in 2018 by Rep. Jeb Hensarling, R-TX, the now retired chair of the House Financial Services Committee. Among other things, the proposal puts Ginnie Mae firmly in control of the government guarantee business.

The FHA’s Mutual Mortgage Insurance Fund is generally healthy but for its Home Equity Conversion Mortgage program, according to the latest FHA audit of the MMIF. In its 2018 report to Congress this week, the Department of Housing and Urban Development had good and bad news regarding the financial condition of the insurance fund. The good news is that the economic value of the MMIF, which backs the FHA’s single-family loan programs, increased to $34.7 billion in fiscal 2018 from $26.7 billion a year ago. Total capital resources rose to $49.2 billion from $40.9 billion during the same period. For the fourth consecutive year, the fund exceeded its statutory capital reserve ratio of 2.00 percent. The ratio rose to 2.76 percent in 2018 from 2.18 percent last year. Premium reductions, had they been in effect, would have reduced the fund’s economic net worth and dropped its capital ratio, industry ...

This week, Ginnie Mae issued an all-participants memo dictating new standards for firms seeking to become issuers, including the stipulation that applicants submit to a corporate credit evaluation. Ginnie said the financial exercise will be “similar to those employed by credit rating agencies.” The evaluation will determine whether an applicant is qualified to be an issuer or whether additional criteria should be imposed even if the basic standards are met. Applicants that rely on a subservicer arrangement will be scrutinized even more. The bulletin also notes that, effective immediately, the agency is implementing new notification requirements for MBS issuers engaged in “certain subservicer advance or servicing income agreements, which do not require prior Ginnie Mae approval, but can impact an issuer’s ongoing liquidity position and financial obligations.” While Ginnie currently permits subservicers to advance ...

Increasingly worried about the financial condition of its largest nonbank issuers amid declining market conditions, Ginnie Mae in late October shot off a liquidity letter to 14 companies, asking them to develop contingency plans. The identity of the firms was not revealed to Inside FHA/VA Lending, but it’s no secret which companies rank among the top echelon of issuer/servicers. The five largest nonbank Ginnie MBS servicers as of Sept. 30 are PennyMac Financial Services, Lakeview Loan Servicing, Freedom Mortgage, Quicken Loans and Mr. Cooper. According to the letter, a copy of which was obtained by this publication, Ginnie wants the companies to develop strategies to right-size their operations. One of the agency’s goals is to lay the groundwork for financial stress tests that all issuer/servicers eventually must meet. Ginnie expects to sit down with the executive management teams of the ...

Ginnie Mae officials would welcome a return of commercial banks to the program, but they are not planning on it. Instead, the agency is looking the other way: at expanding financing options for nonbank portfolios of mortgage servicing rights. The current version of Ginnie’s acknowledgement agreement has been successful, enabling nonbank servicers to arrange MSR financing for virtually their entire portfolios, said Michael Drayne, a senior vice president at Ginnie, during the Residential Mortgage Finance Symposium sponsored by the Structured Finance Industry Group this week in New York. Although a number of banks are financing nonbank servicing portfolios, many are still not participating, he said. Karen Gelernt, a partner at Alston & Bird, noted that many banks continue to have anxiety about what will happen if a servicer defaults on its Ginnie requirements. Speaking as moderator on a panel with ...

Certain potential changes could materially affect origination volume and determine the government-sponsored enterprises’ direction going forward, according to analysts. One of those changes could have a significant impact on the FHA market. Wells Fargo Securities analysts recently looked at three potential developments in the Fannie Mae/Freddie Mac sphere and evaluated their effects on the broader mortgage market. Two of those potential changes – loan limits and guarantee fees – are controlled directly by the Federal Housing Finance Agency, while the third relates to the temporary GSE qualified-mortgage exemption, or “QM patch,” which could affect the FHA market. All three factors loom over the mortgage landscape as the FHFA expects a new director in January 2019, who is likely to be more right leaning and could shift the focus back to shrinking the ...

The amount of single-family Ginnie Mae mortgage servicing rights increased a modest 0.9 percent during the third quarter, according to a new analysis and ranking by Inside FHA/VA Lending. Some $1.858 trillion of Ginnie mortgage-backed securities were outstanding at the end of September, a 6.2 percent gain over the previous 12 months. Loans guaranteed by the VA continued to be the fastest growing segment of the Ginnie market. Volume was up 1.3 percent from the end of June, hitting $630.9 billion, an 11.0 percent increase from the same time last year. The FHA segment remained far bigger: $1.114 trillion at the end of the third quarter. However, its growth rate has been slower: 0.7 percent from June and 3.9 percent compared to September 2017. Loan performance deteriorated slightly in both programs. Some 92.9 percent of FHA loans were current at the end of September, down from ... [Charts]

Participants in Ginnie Mae’s single-family mortgage-backed securities program may expect new policy changes, including servicer and credit ratings for the largest issuers, clarification of “appropriate sources of liquidity” and other financial requirements. The changes come as issuer liquidity continues to be a primary concern for Ginnie Mae, particularly with nonbanks now the dominant segment in the single-family MBS program. “We’re working on those policies right now,” said Leslie Meaux Pordzik, Ginnie’s acting senior vice president, Office of Issuer and Portfolio Management, at the Mortgage Bankers Association’s annual convention in Washington, DC, this week. Nonbanks account for nearly two-thirds of Ginnie MBS issuance and approximately 75 percent of FHA and VA lending. Nonbanks serviced a record 61.1 percent of outstanding Ginnie single-family MBS at the end of the ...

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 ...