Mortgage Bankers Association (MBA) of Puerto Rico Data as of April 30, 2014 or as noted

Transcription

1 FHA Production Highlights & Market News Mortgage Bankers Association (MBA) of Puerto Rico Data as of April 30, 2014 or as noted

2 FHA News: Mortgagee Letters 2

3 ML : August 15, 2013 Subject: Collections and Disputed Accounts TOTAL Mortgage Scorecard User Guide Effective for case numbers assigned on or after October 15, 2013 FHA requires lenders to follow the guidelines on collection accounts with an aggregate balance equal to or greater than $2000 Collection accounts of a non-purchasing spouse in a community property state are included in the cumulative balance Medical collections are excluded from this guidance Disputed accounts of $1000 or more (excluding medical) must be manually underwritten Disputed accounts of a non-purchasing spouse in a community property state are not included in the cumulative balance for purposes of determining in a downgrade to a manual underwrite is required 3

4 ML : August 15, 2013 Subject: Back to Work - Extenuating Circumstances Effective for case numbers assigned on or after August 15, 2013 through September 30, 2016 Provides minimum underwriting standards and criteria for evaluating borrowers who have experienced an Economic Event that resulted in a severe reduction in income due to a job loss, or other circumstances resulting in reduced Household Income Describes the use of housing counseling to qualify under the provisions of this ML Clarifies the process for requesting a review of information contained in CAIVRS for borrowers seeking an FHA-insured mortgage in accordance with the provisions of this ML. 4

5 ML : September 3, 2013 Subject: Home Equity Conversion Mortgage (HECM) Financial Assessment and Property Charge Guide Effective for HECM case numbers assigned on or after January 31, 2014 Refer to the HECM Financial Assessment and Property Charge Guide which was a part of the ML for requirements relating to: performing the credit history analysis performing the cash flow/residual income analysis documenting and verifying credit, income assets, and property charges evaluating extenuating circumstances and compensating factors evaluating the results of the financial assessment in determining eligibility for the HECM determining if funding sources for property charges from HECM proceeds will be required completing a HECM financial assessment worksheet 5

6 ML : September 5, 2013 Subject: Application of Unused Borrower Funds from an Escrow Account on an Existing Mortgage in FHA-Insured Refinance Transactions Effective for case numbers assigned on or after November 1, 2013 Clarification of policy on the application of unused borrower funds from an escrow account on an existing mortgage that are not sent directly to the borrower, but applied to a newly originated FHAinsured refinance mortgage Reminders to mortgagees that calculating the maximum mortgage on a streamline refinance transaction starts with the outstanding principal balance of the existing loan, not the payoff amount Documentation and submission requirements evidencing borrower authorization for application of unused borrower funds from an escrow account on an existing mortgage 6

7 ML : January 21, 2014 Subject: Revised Manual Underwriting Requirements Effective for case numbers assigned on or after April 21, 2014 Mortgagee Letter explains maximum qualifying ratios for manually underwritten mortgages, and the compensating factors that must be documented in order for a mortgagee to approve a borrower whose qualifying ratios exceed certain 7

8 ML : January 30, 2014 Subject: Electronic Signatures Effective immediately Allows e-signatures on origination, servicing, and loss mitigation documents, as well as FHA insurance claims, REO sales contracts and related addenda. Initially, e-signatures will not be accepted on the mortgage note itself. FHA plans to begin accepting e-signatures on forward mortgage notes at the end of the year. Lenders choosing to employ e-signatures may begin using this policy immediately for single family forward mortgages and FHA s Home Equity Conversion Mortgages (HECM). Lenders must adhere to the Electronic Signatures in Global and National Commerce Act (ESIGN), have specific technology and operational capabilities and controls, documented quality control processes, and the ability to adapt e-signature to FHA s existing record retention processes. 8

9 ML : April 25, 2014 (SLIDE 1 of 2) Subject: Home Equity Conversion Mortgage (HECM) Program: Non-Borrowing Spouse Effective for Case Numbers issues on or after August 4, A Non-Borrowing Spouse must comply with FHA s requirements for disclosure and verification of Social Security and Employer Identification numbers by mortgagors HECM documents must contain a provision deferring due and payable status until the death of the last surviving Non- Borrowing Spouse or until another listed event occurs. FHA is revising the model loan documents to incorporate these changes. 9

10 ML : April 25, 2014 (SLIDE 2 OF 2) Subject: Home Equity Conversion Mortgage (HECM) Program: Non-Borrowing Spouse HECM mortgagors must state whether or not legally married at the time of initial application. Mortgagees must verify the name and age of any Non-Borrowing Spouse. Non-Borrowing Spouses do not have to be 62 years old. Principal Limit is based on the age of the youngest mortgagor or Non-Borrowing Spouse. Where a Non-Borrowing Spouse has been identified, the mortgagee must obtain an additional certification from the HECM mortgagor spouse confirming that his/her Non-Borrowing Spouse remains his/her spouse and his/her Non-Borrowing Spouse continues to reside in the property as his/her Principal Residence. 10

11 ML : April 29, 2014 (slide 1 of 2) Subject: Guidance on Nonprofits Assisting Government Entities in Providing Secondary Financing in Conjunction with FHA-Insured Mortgages Effective 4/29/ days to comply with documentation requirements and data entry for secondary financing in the FHAC. Where a government entity uses a nonprofit to assist in the operation of the government entity s secondary assistance programs, HUD approval and placement on the Nonprofit Organization Roster are not required so long as: There is a documented agreement functions performed are limited to the government entity s secondary financial program Secondary financing Note and Deed of Trust name the government entity as the Mortgagee 11

12 ML : April 29, 2014 (slide 2 of 2) Subject: Guidance on Nonprofits Assisting Government Entities in Providing Secondary Financing in Conjunction with FHA-Insured Mortgages If a nonprofit closes secondary financing in its own name, that nonprofit is required to be both HUD approved and placed on the Nonprofit Organization Roster even if the secondary financing will be held by the government entity. FHA-approved mortgages are required to enter secondary financing in FHAC. 12

13 Common Underwriting Findings Top reasons loans are rated unacceptable after a Post Endorsement Technical Review (PETR): Flood Certification Not Provided. Missing documents, e.g. DPA docs, tax returns for selfemployed borrowers, gift funds not properly documented, evidence of Flood Insurance not provided when applicable. Evidence of gift funds not reflected on the HUD-1. Income and Asset miscalculations requiring loans to be rescored in TOTAL. Documents provided have not been translated into English. 13

14 Common Quality Assurance Origination Findings (slide 1 of 2) FINDINGS Failed to maintain and Implement a Quality Control (QC) Plan in compliance with HUD requirements. Incomplete Plan/MRB for Repeat Finding Deficiencies with the Implementation of the lender s QC Plan Deficiencies with Implementation/MRB for Repeat Finding REFERENCE HUD Handbook REV-2, Chapter 7 HUD Handbook REV-2, Chapter 7 14 Failed to ensure data integrity of the information entered by the lender into the FHA Connection. Failed to adequately calculate unreimbursed expenses; taking into consideration how it materially affects the borrower s stability of income/continuance over the next three years Failed to adequately document the source of funds used to process and close the loan. Failed to ensure the borrowers were not charged fees that were not permitted by HUD; currently observing tax service fees charged to the borrower Failed to provide all loan documents upon request. Possible indemnification and MRB for egregiousness Failed to adequately determine the net tangible benefit for a streamline refinance transaction. Omission of debts underestimation of property taxes (borrower would not qualify) Borrower was not employed at the time of closing. Borrower was not employed at the time of closing. Documents relating to the credit, employment, or income of borrowers were handled by, or transmitted from or through the equipment of interested third parties. ML 05-36; 05-15; 04-22; and HUD Handbook C.3; Lender Insurance Guide; FHA TOTAL Mortgage Scorecard User Guide. HUD Handbook D. Indemnification 5 years ML 05-15; 04-44; HUD Handbook A.1, FHA TOTAL Scorecard User Guide HUD Handbook , 6.A3; A HUD Handbook B.1, B.2 ML 09-32; 11-11; and HUD Handbook C Indemnification 5 years ML 12-03; and HUD Handbook C. Indemnification 5 years HUD Handbook A.4b; B1.g HUD Handbook LB.1.f Mortgage Credit Analysis for Mortgage Insurance. HUD Handbook B.1 f Policy Prohibiting the use of documents handled by Third Parties.

15 Common Quality Assurance Origination Findings (slide 2 of 2) FINDINGS REFERENCE HECM S Failed to reconcile discrepancies found in appraisal ML 10-07, 10-22; and HUD Handbook documents and/or provide documentation required for loan eligibility. Steering borrowers to counseling agencies ML 04-25; 10-37; and HUD Handbook Chapter 2, and REV-5 15

16 Common Quality Assurance Servicing Findings Deficient Quality Control plan Single Family Default Monitoring System (SFDMS) Fatal errors; data integrity Management Review loss mitigation, foreclosure Unallowable Fees Loss Mitigation (LM) - Adherence to Waterfall since change Foreclosure - Not timely and not curtailing interest properly 203K Draws/servicing of rehabilitation; GNMA requirement. Application of Payment Suspending payments for long periods Pre-Foreclosure/Short Sale interested third parties; conflict of interest Failure to file a claim for insurance benefits timely. 16

17 FHA Production Statistics 17

18 FHA Resource Center Puerto Rico represents 0.9% of all Service Requests. Primary Category October November December January February March April Category Totals Appraisal/Property Analysis Closing and Insuring Condominium Project Approval Consumer Information 1 1 Credit Underwriting CRM Support (HUD Users) FHA System Support HUD Owned Properties Lender Approval/Eligibility Misrouted Contacts Partner Approval/Eligibility 1 1 Quality Control/Compliance 1 1 Rehabilitation Programs Reverse Mortgage Programs TOTAL: ,145 18

19 Monthly Endorsement Trends Over the period below, the Caribbean share of the AHOC peaked in April 2013 at 7.0% and hit a low of 2.9% in January 2014; current share of the AHOC is 3.7%. FHA Endorsements by Month: Fiscal Year 2013 through April FYTD ,000 40,000 2,500 35,000 30,000 2,000 25,000 1,500 20,000 1,000 15,000 10, ,000 0 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 Carribean 1,291 1,064 1,206 1,421 1,255 1,117 2,406 1,994 1,559 1,239 1, Atlanta HOC 33,524 30,444 29,369 34,795 29,902 31,044 34,499 35,260 30,921 29,395 28,137 23,219 24,076 18,176 18,468 19,499 14,293 15,635 18,

20 Endorsement Share by Loan Type Endorsement Share by Loan Type April FYTD Caribbean Endorsement Share by Loan Type April FYTD Atlanta HOC Purchases Refinances Purchases Refinances 1,818 40% 2,749 60% 36,172 28% 93,290 72% Endorsement Share by Loan Type April FYTD Nationwide Purchases Refinances 117,665 25% 351,368 75% 20

21 Endorsement Trends by Loan Type Endorsement Trends Caribbean April FYTD 2014 April FYTD 2013 Endorsement Trends - Atlanta HOC April FYTD 2014 April FYTD ,525 3,265 7,507 8,819 1,818 5,822 36, ,327 2,749 93,290 3, ,425 1,692 2,475 4,567 9,787 68,430 78, , ,577 21

22 Leading Lenders by Endorsements April Fiscal YTD 2014 Forward Lenders HECM Lenders State/Territory Originating Mortgagee # $ PUERTO RICO BANCO POPULAR DE PUERTO RICO 1, ,030,092 PUERTO RICO DORAL MORTGAGE CORPORATION ,624,105 PUERTO RICO SCOTIABANK DE PUERTO RICO ,718,952 PUERTO RICO FIRST BANK OF PR ,368,185 PUERTO RICO MONEY HOUSE INC ,909,955 PUERTO RICO PREFERRED MORTGAGE CORP ,247,048 PUERTO RICO ORIENTAL BANK AND TRUST ,799,089 PUERTO RICO EMI EQUITY MORTGAGE INC ,108,712 PUERTO RICO SUN WEST MORTGAGE CO INC ,481,759 PUERTO RICO HOME MORTGAGE BANKERS 99 11,210,401 PUERTO RICO METRO ISLAND MORTGAGE INC 85 9,718,226 PUERTO RICO TRUST MORTGAGE CORPORATION 80 9,115,856 PUERTO RICO VIG MORTGAGE CORP 76 10,410,585 PUERTO RICO HR MORTGAGE CORP 74 7,864,609 PUERTO RICO FIRST EQUITY MORTGAGE BANKERS INC 72 9,992,969 PUERTO RICO FIRST SECURITY MORTGAGE INC 59 7,918,390 PUERTO RICO R F MORTGAGE AND INVESTMENT CORP 57 7,803,883 State/Territory Originating Mortgagee # $ PUERTO RICO MONEY HOUSE INC ,421,938 PUERTO RICO SENIOR MORTGAGE BANKERS INC ,939,976 PUERTO RICO VIG MORTGAGE CORP 43 5,617,008 PUERTO RICO SUN WEST MORTGAGE CO INC 26 4,398,659 PUERTO RICO HISPANIA FINANCIAL SERVICES CORP 16 1,510,593 PUERTO RICO METRO ISLAND MORTGAGE INC 14 1,297,061 PUERTO RICO FIRST EQUITY MORTGAGE BANKERS INC 11 2,084,527 PUERTO RICO MULTIPLES MORTGAGE CORPORATION 10 1,057,000 PUERTO RICO COOPERATIVA DE AHORRO Y CREDITO DE ARECI 7 526,543 PUERTO RICO ADVANCE MORTGAGE BANKERS INC 6 643,000 PUERTO RICO EMI EQUITY MORTGAGE INC 5 735,426 PUERTO RICO HR MORTGAGE CORP 4 631,000 PUERTO RICO BANCO POPULAR DE PUERTO RICO 4 378,221 PUERTO RICO FIRST SECURITY MORTGAGE INC 4 550,000 PUERTO RICO AAA CONCORDIA MORTGAGE CORP 4 840,000 PUERTO RICO R F MORTGAGE AND INVESTMENT CORP 4 366,099 PUERTO RICO MASTER MORTGAGE CORPORATION 4 413,000 22

23 REO Acquisitions, Sales, & Inventory Atlanta Homeownership Center 7,000 6,000 5,000 4,000 20,000 18,000 16,000 14,000 12,000 10,000 3,000 2,000 1,000 8,000 6,000 4,000 2,000 0 Sep- 12 Oct-12 Nov- 12 Dec- 12 Jan-13 Feb-13 Mar-13 Apr-13 May- 13 Jun-13 Jul-13 Aug- 13 Sep- 13 Oct-13 Nov- 13 Dec- 13 Jan-14 Feb-14 Mar-14 Apr-14 Acquistions 2,717 3,195 3,148 3,426 3,608 3,862 3,961 3,942 4,210 3,462 3,347 3,211 2,268 2,847 2,945 2,231 2,428 2,130 2,209 2,112 Sales 3,228 3,362 2,988 2,809 3,041 2,987 3,268 3,569 3,666 3,508 3,697 3,453 3,714 3,751 3,138 2,913 2,691 2,606 2,714 2,745 Inventory 13,305 13,004 13,047 13,559 14,246 15,158 15,901 16,300 17,043 16,626 16,117 15,863 14,278 13,189 13,005 12,135 11,814 11,137 10,485 9,

24 REO Acquisitions, Sales, & Inventory Caribbean - REO Acquisitions, Sales, and Inventory Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 Acquisitions Sales Inventory

25 25 IIF, Default & Foreclosure Rate Comparisons National Atlanta HOC Puerto Rico Virgin Islands Fiscal Year April FYTD 2014 Insurance In Force 7,736,483 7,822,006 7,809,897 Unpaid Balance $1,182,342,356,644 $1,292,964,673,533 $1,161,015,024, Day Defaults 719, , , Day Default Rate 9.302% 7.795% 6.996% Foreclosed Upon 100, ,692 39,530 Foreclosed Upon Rate 1.299% 1.415% 0.506% Insurance In Force 2,258,508 2,278,095 2,276,226 Unpaid Balance $285,072,158,990 $311,043,868,926 $283,260,438, Day Defaults 267, , , Day Default Rate % 9.483% 8.392% Foreclosed Upon 34,966 41,444 16,342 Foreclosed Upon Rate 1.548% 1.819% 0.718% Insurance In Force 112, , ,178 % National 1.45% 1.44% 1.44% % AHOC 4.96% 4.94% 4.93% Unpaid Balance $9,621,926,077 $11,074,918,986 $10,178,185, Day Defaults 8,426 7,675 8, Day Default Rate 7.520% 6.819% 7.345% Foreclosed Upon Foreclosed Upon Rate 0.283% 0.403% 0.295% Insurance In Force Unpaid Balance $67,436,701 $76,446,528 $79,179, Day Defaults Day Default Rate 6.362% 8.171% 9.142% Foreclosed Upon Foreclosed Upon Rate 0.000% 0.000% 0.187%

26 Cost/Value/Price Net Return REO Sales Net Returns Puerto Rico Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr Month Average Properties Sold Owner Occupancy % 47% 67% 80% 80% 83% 82% 83% 79% 84% 62% 69% 82% 70% 77% Days in Inventory Acq. Cost (Claim) $122,933 $133,778 $121,960 $118,532 $129,084 $127,804 $132,265 $113,134 $128,299 $110,106 $130,245 $129,256 $119,378 $124,765 Acq. Appraised Value $105,246 $122,996 $112,346 $101,769 $113,906 $112,617 $108,704 $103,072 $117,931 $109,943 $112,255 $116,191 $105,189 $111,405 Total CIE (REO Costs)** $9,479 $11,881 $10,960 $10,173 $10,157 $12,325 $10,942 $9,639 $10,869 $9,393 $9,887 $10,328 $9,529 $12,461 Sales Price $70,515 $94,707 $87,630 $84,468 $89,986 $92,346 $92,398 $85,550 $88,448 $76,960 $86,436 $90,629 $79,944 $87,546 % Sales to Appraised Value 67% 77% 78% 83% 79% 82% 85% 83% 75% 70% 77% 78% 76% 79% Loss ($61,897) ($50,952) ($45,290) ($44,237) ($49,255) ($47,783) ($50,809) ($37,223) ($50,720) ($42,539) ($53,696) ($48,955) ($48,963) ($49,680) Net Return 49.6% 61.9% 62.9% 62.7% 61.8% 62.6% 61.6% 67.1% 60.5% 61.4% 58.8% 62.1% 59.0% 60.2% **Total CIE = Capital Income/ Expenses = sum of taxes, repairs, M&O, sales expenses, misc. $160,000 $120,000 Net Return: Puerto Rico 70.0% 60.0% 50.0% $80,000 $40,000 $0 40.0% 30.0% 20.0% 10.0% 0.0% Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 Acq. Cost (Claim) $122,933 $133,778 $121,960 $118,532 $129,084 $127,804 $132,265 $113,134 $128,299 $110,106 $130,245 $129,256 $119,378 Acq. Appraised Value $105,246 $122,996 $112,346 $101,769 $113,906 $112,617 $108,704 $103,072 $117,931 $109,943 $112,255 $116,191 $105,189 Sales Price $70,515 $94,707 $87,630 $84,468 $89,986 $92,346 $92,398 $85,550 $88,448 $76,960 $86,436 $90,629 $79,944 Net Return 49.6% 61.9% 62.9% 62.7% 61.8% 62.6% 61.6% 67.1% 60.5% 61.4% 58.8% 62.1% 59.0% 26

27 Default Reasons FHA Cases Reasons for Borrower Defaults - Caribbean Unpaid Balance Default Reason 27 2,617, Unable to Contact Borrower 24 3,155, Other 17 1,609, Excessive obligations (same income, including habitual nonpayment of debts.) 10 1,252, Curtailment of Borrower Income 5 1,098, Payment Dispute 3 480, Illness of principal mortgagor 3 525, Illness of mortgagor's family member 2 405, Unemployment 1 114, Energy-Environment cost 1 40, Transfer of Ownership Pending 27

28 Rates Homeownership Rates Homeownership Rate Trend 76.0% 74.0% 72.0% 70.0% 68.0% 66.0% 64.0% 62.0% 60.0% 58.0% United States 64.2% 66.2% 66.9% 67.3% 67.2% 66.6% 65.9% 65.4% 64.6% 63.9% Puerto Rico 72.1% 72.9% 74.5% 74.1% 74.3% 72.4% 71.5% 70.5% 69.8% 69.5% 1990 & 2000 Data is from the Census is 1-year ACS data. 28