FHA Financing Accounted for 37% of Home Purchases in October

FHA’s share of the home purchase market rose sharply in October as first-time homebuyers dominated the housing market. According to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions, FHA financing represented 37 percent of home sale transactions tracked last month  up from a 32 percent share as recently as August. Perhaps more importantly, FHA accounted for a whopping 61 percent of the financing used by first-time homebuyers in
October. This was up from 58 percent in August and September. The possibility that the homebuyer tax credit would expire was clearly a factor in the jump in first-time homebuyer activity as this group accounted for 47 percent of home purchase transactions tracked in October.

Click here for more info on the Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions.

Fed Eliminates New TILA Rule Conflict for FHA Mortgages

On the eve of new lending restrictions on subprime and higher-priced mortgages going into effect, the Federal Reserve Board has issued guidance clarifying that limitations on prepayment penalties will not apply to FHA mortgages.

Starting tomorrow, all “higher-priced” mortgages carrying annual percentage rates at least 1.5 percentage points higher than a comparable prime loan will be subject to much tougher lending requirements. These include requiring the verification of borrowers’ income and assets, prohibiting prepayment penalties except under certain circumstances, and requiring lenders to assess a borrower’s ability to repay a mortgage. In addition, the new Truth in Lending Act regulations impose a host of new restrictions on mortgage advertising.

Loss of TBW Leaves Big Hole in FHA Broker Business

The demise of Taylor, Bean and Whitaker is leaving a big hole in the market for FHA mortgages originated by mortgage brokers. According to Inside Mortgage Finance’s new special report “FHA Market Profile: First Half 2009,” TBW was by far the largest wholesale purchaser of FHA mortgages in the first six months of this year with $5.37 billion in volume.

Wells Fargo was the second largest with $4.24 billion in FHA mortgages purchased from brokers. In third place was Flagstar Bank with $3.07 billion in FHA broker business, followed by MetLife Bank in fourth place with $2.37 billion in volume. Rounding out the top five FHA wholesalers in the first half was Bank of America with $1.92 billion in business. A detailed breakdown of the top 50 FHA lenders’ business by state can be found in the new report.

Click here for more info.

Mortgage Securitization Rate Hits New High in 2009

The percentage of new mortgages rolled into securities climbed to a new record high in the first half of 2009 as the mortgage market’s dependence on government-related programs continued to grow. According to a new analysis by Inside MBS & ABS, a hefty 82 percent of the estimated $995 billion in mortgages originated in the first six months of the year ended up in mortgage-backed securities. This was up from 79 percent in 2008 and was the highest level ever recorded by Inside MBS & ABS.

While much of the blame for the recent mortgage crisis has been leveled at mortgage securitization, the plain fact is that most of the major government mortgage programs rely heavily on securitization. Some 93 percent of FHA and VA mortgages and 89 percent of Fannie Mae and Freddie Mac eligible mortgages were securitized in the first half.

Little Change in Mortgage Product Mix in 2Q09

Despite a 24 percent jump in mortgage origination activity between the first and second quarters of this year, there was relatively little change in the mix of mortgage products in the marketplace. According to a new analysis by Inside Mortgage Finance slated to be published this week, conventional conforming mortgages–the kind sold to Fannie Mae and Freddie Mac–continued to account for the largest share of new mortgages made in 2Q09 at 69 percent. This was down slightly from the 70 percent share found in 1Q09. The FHA/VA share of new originations rose modestly from 22 to 23 percent during the same period. Meanwhile, the jumbo share and home-equity loan share of new originations remained flat in the second quarter at 5 percent and 3 percent, respectively.

NJ, MD and IL Among Top FHA States in Refi Activity in 2009

Even though FHA refinance activity has been relatively subdued this year compared to the overall mortgage market, several top FHA lending states have posted some surprisingly high refi numbers. According to a new analysis by Inside Mortgage Finance, New Jersey–the third largest FHA lending state in the first half of 2009–saw 73 percent of its total FHA volume come from refinances. This is considerably higher than the 57 percent refi share for FHA lending nationwide during the six-month period. Fourth ranked Maryland and fifth ranked Illinois also posted high refi shares of 69 and 73 percent, respectively. California, the top FHA lending state, had one of the lowest refinance shares of all states at just 29 percent.