MReport Jan 2019

TheMReport — News and strategies for the evolving mortgage marketplace.

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58 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT GOVERNMENT Making History BCFP and FHFA announce the availability of loan origination data. T he Bureau of Consumer Financial Protection (BCFP) and the Fed- eral Housing Finance Agency (FHFA) announced that they are releasing a comprehensive set of loan-level data on mortgage loan originations that have been collected over the past few years. The two agencies have been collecting data in the National Mortgage Database since 2012, and they began collecting loan origina- tion data in 2014 on a quarterly basis. This release marks the first time the information collected through the National Survey of Mortgage Originations (NSMO) is being made available. Not only does the NSMO ad- dress regulatory mandates, but also it serves to "obtain informa- tion to help improve lending prac- tices and the mortgage process for future borrowers," explained Sandra Thompson, Deputy Director of the FHFA. "The NSMO data should be very helpful to policymakers, the mortgage industry and researchers in understanding consumer be- havior and borrowers' experiences obtaining a mortgage," Thompson said. Mick Mulvany, Acting Director of the BCFP, elaborated, "These data will allow greater transpar- ency, accountability, and effective- ness around borrowers' mortgage experiences." The National Mortgage Database was launched to comply with the Housing and Economic Recovery Act, which calls for a survey of residential mortgages on a monthly basis, and the Dodd-Frank Act, which requires the BCFP to moni- tor the primary mortgage market through survey data. The NSMO was sent to borrowers "who had recently obtained mortgages" each quarter "to gather feedback on their experiences during the process of getting a mortgage, their percep- tion of the mortgage market, and their future expectations," the FHFA and BCFP explained with their announcement Thursday. The survey includes questions on topics including how concerned borrowers were about qualifying for a mortgage, how familiar they were with various aspects of the mortgage process before obtaining their loan, and how satisfied they were with the various profession- als they interacted with through- out the process. Congress Examines FHA A look at the organization's annual report of its MMI fund. T he Federal Housing Administration (FHA) released its 2018 Annual Report to Congress. The report, which highlights the eco- nomic condition of the agency's Mutual Mortgage Insurance Fund (MMI Fund) indicated that the fund had a total economic net worth of $34.8 billion, an increase of $8 billion over the previous year, and a capital reserve ratio that remained above the statutory minimum of 2 percent for the fourth straight year. The report said that its econom- ic net worth comprised of total capital resources of $49.24 billion and a negative cash flow net pres- ent value (NPV) of -$14.38 billion. "The financial health of FHA's single-family insurance fund is sound," said U.S. Housing and Urban Development Secretary Ben Carson. "FHA is in good hands, guarding against excessive risks, protecting the American taxpayer, and remaining true to our core mission to facilitate safe and affordable mortgage options for qualified borrowers." The MMI Fund supports FHA's single-family mortgage insurance programs and includes all forward mortgage purchase as well as its Home Equity Conversion Mortgage (HECM) and reverse mortgage program. FHA indicated in its report that while its forward mortgages had seen an increase during the year, its reverse mortgage portfolio "continues to decline, represent- ing a continuing economic drain on the MMI Fund from books of business in 2018 and earlier." "As we look to the future, FHA must continue to seek the right balance between facilitating access to mortgage credit and managing risk," said FHA Commissioner Brian Montgomery. "Our number one mission is to make certain FHA remains a stable and reli- able resource for first-time and minority homebuyers and other underserved borrowers." Indicating the need for balance, the report revealed that the MMI Fund's forward mortgage portfo- lio's stand-alone capital ratio was 3.93 percent and had an economic net worth of $46.81 billion. By contrast, the HECM portfolio had a stand-alone capital ratio of negative 18.83 percent and an economic net worth of negative $13.63 billion. "We need to continue address- ing the volatility and financial performance of the HECM port- folio," Montgomery said. Additionally, the report indicat- ed that FHA endorsed over one million forward mortgages in 2018 which included 776,824 purchase loans. Of these, 641,921 borrow- ers were first-time homebuyers. Minority homebuyers accounted for 33.8 percent of all FHA for- ward purchase loans. The report found that HECM endorsements had declined 12.6 percent since last year with 48, 327 mortgages endorsed. Total capital resources in the HECM portfolio totaled $2.11 billion in 2018 which was offset by a negative $15.75 bil- lion in cash flow NPV Looking ahead, Montgomery said that while the forward port- folio was performing well, certain risk trends had to be monitored and addressed, "including the exponential rise in cash-out refi- nance transactions, a continuing increase in the average FHA- insured borrower's debt-to-income ratio, and declining average credit scores throughout our book." In 2018, the report indicated that the average borrower's credit score declined slightly to 670 from 676 in 2017.

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