MReport November 2019

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M R EP O RT | 59 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 Refunds on VA Loans Total More than $400M An inspector general's report shows that refunds ranged from a few thousand to up to $20,000. A report by the Military Times reveals that Veteran Affairs officials have paid out more than $400 million in refunds of home loan funding fees following an inspector general's report. The inspector general's report found that tens of thousands of veterans were improperly charged extra fees when applying for the loans. According to the Military Times, VA officials have reviewed more 130,000 cases over the summer seeking errors, which mostly involved clerical mistakes or disability ratings changes after vets settled on their loans. Existing rules state that veterans and service members must pay a VA funding fee when they apply for a VA home loan, with costs between 0.5% and 3.3% of total lent money. The money is designed to offset administration costs for the department, but disabled veterans are exempt from the fee. The inspector general report released earlier this year, however, found that at least 53,000 disabled veterans had been charged the fees in recent years. VA officials said in May they would review current and past loans, and contact veterans eligible for refunds. VA Secretary Robert Wilkie said in a statement that the effort stretched back as far as 20 years ago. "Our administration prioritized fixing the problems and paid veterans what they were owed," Wilkie said. The Military Times says the payout total was "significantly above" the nearly $290 million investigators estimated earlier this year. Refunds ranged from several thousand to more than $20,000. It was reported earlier this year that the volume of the amount of loans originated through the Department of Veterans Affairs came to 119,048 loans for $31.9 billion during the first three months of 2019. The average VA loan was $268,213. The Department of Veterans Affairs reported the overall loan volume for Q2 2019 (fiscal-year Q 3) jumped to 155,685 loans for $44.1 billion. In an interview with MReport, Michael Oursler, Chief Credit Officer for NewDay USA, said lead- ing the way for VA loan origination was fintechs, as the technology in- volved helps with quicker process- ing and more efficiency. It allows quicker closing times and a smoother transaction. Not that hitting a contract date for a civilian is not important, it's just a little bit higher stakes in the military space, so being able to leverage technology to improve service is important. Affordable Housing in America FHFA Director Mark Calabria said too many people lack, "an affordable place to call home." T he heads of both the Federal Housing Finance Agency and the U.S. Department of the Treasury testified before the House Financial Services Com- mittee on the future of afford- able housing in America. "Too many Americans lack what each of us deserves: an affordable place to call home, whether it is rented or owned," said Mark Calabria, Director of the FHFA during the hearing. Calabria continued, saying housing affordability is a "national problem," but has local roots, as the fundamental cause of the af- fordability issues are local policies that make it harder and more ex- pensive to build new housing. He said zoning and land-use restric- tions, environmental regulations, building codes, and permitting requirements "disproportionately hurt low-income Americans." "Our affordability problems will not be solved until local govern- ments remove these impediments that limit the supply of affordable housing in their communities," Calabria said. "Our housing finance system also has a role to play. Fannie Mae and Freddie Mac exist to ensure mortgage credit availabil- ity through the economic cycle." Fannie Mae and Freddie Mac own $5.6 trillion in single and multifamily mortgages—nearly half of the market. Calabria, how- ever, added they were limited to just $6 billion in allowable capital reserves. The FHFA and the U.S. Department of the Treasury al- lowed the GSEs to retain capital of up to $45 billion combined. Calabria called this a "significant step forward." "To be clear, Treasury does not propose, and indeed op- poses, reducing or eliminating the government-sponsored enterprises' (GSEs) long-standing support for affordable housing," said Steven Mcuchin, Secretary of the U.S. Department of the Treasury. Mnuchin said the Treasury's plan advocates for the continued government backing, support, and availability of the 30-year fixed- rate mortgage loans. He also added the GSEs have at least four key statutory mandates to promote access to affordable mortgage credit for "historically underserved borrow- ers and renters." The U.S. Department of the Treasury released its plan to reform the housing finance system in September. According to the department, the Treasury Housing Reform Plan consists of a series of recom- mended legislative administra- tive reforms aimed to "protect American taxpayers against future bailouts," preserve the 30-year- fixed-rate mortgage, and help guide Americans toward the path to homeownership.

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