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Posts Tagged ‘scotsmanguide’

Loan Application Defect Index Falling

January 5th, 2016 Comments off

mortgage    andyenstallblog  creditThe overall amount of fraud risk in home loan documents has been falling, according to what scotsmanguide tells First American, having dropped by 8.2 percent year-over-year Nov., and down 1.3 percent from Oct. to Nov., 2015.

First American’s Loan Application Defect Index has dropped 23.5 percent since it reached its zenith in Oct. 2013. “We had a spike at the beginning of last year,” First American Chief Economist Mark Fleming said on Monday. “That faded in the second half of the year.

Defects come from applicants lying about some information—SS number, income, vacation home called primary. Loans can have several irregularities, and there are many that can crop up, as MHProNews has learned.

Fraud risk carried by investors and lenders also has extensive possibilities: borrowers get a better rate if they occupy the home; or they claim their manufactured home is a single-detached home, which has a lower mortgage.

In any case, says Fleming, he does not know if the defects are innocent mistakes or fraud, but more defects coincide with more fraud risk. “We know that risk is rising as that average [defects are] rising, and risk is falling as that average is falling,” Fleming said.

He noted Florida has a much higher preponderance of defects, but the rate has fallen seven percent in the last three months. ##

(Image credit: andyenstallblog)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

Former Head of Ginnie Mae does not Envision GSE Reform Soon

November 11th, 2015 Comments off

joseph_murin__former_ginnie_mae_prez_and_ceo__scotsmanguide__creditThe former president and CEO of Ginnie Mae, Joseph Murin, said the Obama administration is not looking to recapitalize GSEs Fannie Mae and Freddie Mac, preferring to leave them as a conservatorship from which funds can be extracted as needed. Also, he does not believe reform of the government-sponsored enterprises (GSE) will occur under the next administration, scotsmanguide reports.

The Treasury is using them as a cash cow to use their cash flows for other areas of the federal government, where the administration feels that they need funding,” Murin said. “It is a deliberate strategy to be able to keep the GSEs where they are today, let them continue to earn and to transfer those earnings over to the Treasury.

Treasury Secretary Jack Lew said the administration does not want to release the GSEs from conservatorship now would it consider allowing them to retain earnings. He said President Obama wants Congress to take up housing finance reform so taxpayers would not be unduly exposed to risk.

Noting that the status quo is the administration’s policy, Murin does not believe any major reforms to the GSEs will be adopted, although he says it might be more likely with a Republican presidency, but adds, “I think they will continue to kick the can down the road,” Murin said. “Everybody is pointing to a new administration in 2017. However, I am not sure that is something that is in the cards.

He says some mortgage industry people and Civil Rights groups want the GSEs to recapitalize and release. Murin favors replacing Fannie and Freddie with one entity like Ginnie Mae, which insures mortgage securities backed by the federal government, like FHA, but does not purchase mortgages like the GSEs do. You cannot expect private capital to fill the void left by the absence of a government guarantee because without it, mortgage rates would spike 200 to 300 points. He said, “I don’t think that is ever going to happen, where the private marketplace takes over. The cost of liquidity under a private environment will be too high and it will impact in a negative manner the housing and mortgage market in this country.

The NAACP, the Community Home Lenders Association (CHLA) and the Community Mortgage Lenders of America (CMLA) all support a recapitalization of the GSEs. The NAACP and two other progressive groups are concerned that access to credit for lower-income borrowers is at risk under the status quo.

Mortgage trade groups are concerned Fannie and Freddie will be eliminated, especially since Freddie Mac reported a $475 million loss in Q3 2015, as MHProNews reported Nov. 4, 2015, a significant drop compared to net income of $4.2 billion in the same quarter of 2014. While the Treasury will not have to come to its rescue this time, Federal Housing Finance Agency Director Mel Watt predicted the GSEs will likely have to make draws against the Treasury as their capital reserves are decreased to zero by 2018.

CMLA Executive Director Glen Corso says taxpayer-funded bailouts could lead to the elimination of the GSEs. “There are folks out there that would like to see the GSEs shut down, and our concern is that gives them ammunition to argue that, ‘My God, they are at it again; they are losing money, let’s shut them down right now,’” Corso said. “Our members are very concerned about that.##

(Photo credit: scotsmanguide–Joseph Murin, former CEO and president of Ginnie Mae.)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.