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  • Fannie Mae and Freddie Mac update high LTV refinance ratio for one-unit, principle residences

    Federal Issues

    On May 22, Fannie Mae issued Lender Letter LL-2018-02, which updates options related to the high loan-to-value (LTV) refinance option released in September 2017 (LL-2017-05). Fannie Mae, at the direction of the Federal Housing Finance Authority and in conjunction with Freddie Mac, increased the minimum refinance LTV ratio from 95.01 percent to 97.01 percent for one-unit, principle residences. Additionally, there are no minimum credit score requirements or a maximum debt-to-income ratio for most high LTV refinances. The Lender Letter also notes that the Loan-Level Price Adjustment Matrix on Fannie Mae’s website is updated to include the high LTV refinances and provides specific loan delivery requirements.

    Freddie Mac announced the same LTV ratio change in Guide Bulletin 2018-8. The bulletin also announced, among other things, a “Credit Fee in Price” cap structure, effective on January 1, 2019, for applicable refinance mortgages. According to the bulletin, the pricing cap is designed to balance affordability to the consumer and risk to the lender. The pricing cap structure is related to the LTV ratio of the refinance and occupancy type of the property. Other updates include, (i) clarification of income stability and credit inquiries; (ii) concurrent transfers of servicing; and (iii) investor reporting change initiative.

    Federal Issues Fannie Mae Freddie Mac Refinance LTV Ratio FHFA Mortgages

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  • VA releases FAQs on IRRRL policy guidance

    Agency Rule-Making & Guidance

    On April 5, the Department of Veterans Affairs released FAQs regarding policy guidance for VA Interest Rate Reduction Refinance Loans (IRRRL). The FAQs address a range of questions regarding the IRRRL policy guidance issued in February (previously covered by InfoBytes here), including noting that the requirement to provide the Lender Certification disclosure with initial disclosure documents has been removed. If a Lender Certification is necessary, the lender will be required to provide the document at closing. Additionally, the FAQs clarify that, while the lender will need to be able to demonstrate that the Veteran’s Statement was sent to and received by the veteran in the initial disclosure package, the VA will not require the veteran’s signature until the final statement given with the closing documents.

    Agency Rule-Making & Guidance Department of Veterans Affairs Mortgages Refinance IRRRL

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  • Ginnie Mae tells companies to address VA refi churning

    Federal Issues

    On February 8, Ginnie Mae announced that it had sent notices to a small number of issuers in the Ginnie Mae multi-issuer mortgage-backed security (MBS) program warning them about their VA mortgage loan prepayment speeds, which deviated from the norm and put the veteran benefit at risk. According to Ginnie Mae, the notices require the issuers to create a “corrective action plan that identifies immediate strategies to bring prepayment speeds in line with market peers.” Issuers unable to correct their performance risk losing access to Ginnie Mae multi-issuer pools. The warnings are a result of a task force formed between Ginnie Mae and the Department of Veterans Affairs (VA), to address refinance speeds and aggressive marketing in the VA loan space.

    As previously covered by InfoBytes, Ginnie Mae also issued APM 17-06 which imposes tougher pooling standards on certain refinance loans. Additionally, the VA issued new policy guidance for its Interest Rate Reduction Refinance Loans (IRRRL) disclosures in an effort to assist borrowers in deciding whether the IRRRL is in their best interest, previously covered by InfoBytes here.

    Federal Issues Ginnie Mae Department of Veterans Affairs Mortgages Refinance

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  • VA issues guidance for IRRRL loans

    Agency Rule-Making & Guidance

    On February 1, the Department of Veterans Affairs released Circular 26-18-1, which informs lenders about new policy guidance for Interest Rate Reduction Refinance Loans (IRRRL) disclosures. Effective April 1, lenders are required to provide the Veteran’s Statement disclosure and the Lender Certification disclosure (if applicable) with the initial disclosure documents, which should be no later than three business days after receiving an application, and should confirm delivery in the Loan Guaranty Certificate process. According to the circular, the early disclosure of the Veteran’s Statement will assist the borrower in making informed decisions about whether the IRRRL is in their best interest. The circular also provides details for lenders about what specific information needs to be included in the Veteran’s Statement throughout the loan process.

    Agency Rule-Making & Guidance Department of Veterans Affairs Mortgages Refinance IRRRL

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  • Ginnie Mae Imposes Tougher Pooling Standards on Certain Refinance Loans

    Federal Issues

    Last week, Ginnie Mae announced an All Participants Memorandum, APM 17-06, regarding pooling eligibility for refinance loans. According to Ginnie Mae, the purpose of the December 7 Memorandum is to expand the pooling restrictions announced last year in APM 16-05 to address frequent loan churning and quick prepayments. Specifically, for pool issuances on or after April 1, 2018, all streamline and cash-out refinance loans are eligible for Ginnie Mae I Single Issuer Pools and Ginnie Mae II Multiple Issuer Pools only if (i) six consecutive borrower monthly payments are made; and (ii) the first payment due date of the refinance loan must be at least 210 days after the first payment due date on the original loan. Refinance Loans that are fully underwritten and meet certain criteria will not be subject to the new pooling restrictions.

    APM 16-05 remains effective until APM 17-06 becomes effective on April 1, 2018. Ginnie Mae will continue active monitoring for unusually rapid prepayment rates and will institute sanctions for noncompliance. Ginnie Mae also plans to publish revised pooling standards for premium rate loans in early 2018.

    Federal Issues Refinance Mortgages Ginnie Mae

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  • FHFA Releases July 2017 Refinance Report

    Lending

    On September 14, the Federal Housing Finance Agency (FHFA) published its Refinance Report for July 2017. As previously reported by the FHFA and other sources, interest rates continued to increase for 30-year fixed-rate mortgages in July (from 3.9 percent in June to 3.97 percent), while overall refinance volume decreased. Specific to the Home Affordable Refinance Program (HARP), the report found, among other things, that borrowers completed 2,305 HARP refinances in July, bringing the total HARP refinances to 3,473,109. Consistent with recent Refinance Reports, the report also notes that borrowers who refinanced through HARP had a lower delinquency rate compared to borrowers eligible for HARP who did not refinance through the program. Last month, the FHFA extended HARP until December 31, 2018.

    Lending FHFA Mortgages Refinance Home Affordable Refinance Program

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  • Freddie Mac to Begin Accepting Automated Appraisals for Eligible Home Buyers

    Lending

    On August 18, Freddie Mac issued a press release announcing an automated appraisal alternative for eligible consumers purchasing homes or refinancing existing mortgages. The program, known as an “automated collateral evaluation,” will permit lenders to utilize Freddie Mac’s proprietary platforms to see if an estimate of home value can be used in lieu of obtaining a traditional appraisal. Freddie predicts the program could save home buyers several hundred dollars and reduce closing times by as many as 10 days if it determines a traditional appraisal is unnecessary. Automated appraisals will become available for qualified transactions starting September 1, 2017. The program has been available for qualified home refinances since June 19, 2017.

    Lending Appraisal Mortgages Freddie Mac Refinance

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  • FHFA Launches New HARP Outreach Efforts

    Lending

    On June 25, the FHFA announced that it is taking new steps to expand the reach of HARP. As part of that effort, FHFA Director Mel Watt will participate in a series of town hall-style events to discuss the benefits of HARP and encourage eligible borrowers to participate in the program. The FHFA also launched an interactive online map​ that provides the number of estimated borrowers eligible for HARP in every zip code, county, and metropolitan statistical area in the country.

    HAMP / HARP FHFA Refinance

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  • Maryland Alters Conditions For Refinancing Without Junior Lienholder Permission

    Lending

    On May 15, Maryland Governor Martin O’Malley signed HB 1045, which alters the conditions for refinancing without junior lienholder permission. Under current law, a mortgagor or grantor may refinance the full unpaid balance at a lower interest rate without the permission of the junior lienholder if (i) the principal amount secured by the junior lien does not exceed $150,000; and (ii) the principal amount secured by the refinance mortgage does not exceed the unpaid outstanding principal balance of the first mortgage or deed of trust plus an amount to pay closing costs of up to $5,000. The bill alters this threshold requirement for refinance mortgages to bypass junior lien holder permission by amending the second factor to include closing costs and escrow costs of up to $5,000. The bill defines “escrow costs” as money to pay property taxes, hazard insurance, mortgage insurance, and similar costs associated with real property secured by a refinance mortgage that a lender requires to be collected at closing and held in escrow. The change takes effect October 1, 2014.

    Refinance

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  • Fannie Mae Clarifies Unemployment Benefits Eligibility For Refinance Loans

    Lending

    On May 6, Fannie Mae issued Selling Guide Announcement SEL-2014-04, which makes clear, effective immediately, that unemployment benefits may be used in qualifying an applicant for a DU Refi Plus or Refi Plus loan whether they are seasonal or non-seasonal. The announcement explains that the change was required because, while unemployment benefits constitute a type of public assistance income that may, at the lender’s option, be considered in qualifying an applicant, current guidelines for DU Refi Plus and Refi Plus mortgage loans may be interpreted to restrict that consideration to seasonal unemployment benefits only. The announcement reminds sellers that, as with other income sources and documentation requirements for DU Refi Plus and Refi Plus mortgage loans, lenders are not required to establish a minimum history of receiving income or make a determination that the income can be expected to continue for at least three years.

    Fannie Mae Mortgage Origination Refinance

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