Government Threatens to Dump Lenders from VA Loan Program

Nine lenders have been warned by the U.S. that they will be kicked out of a top mortgage program within months unless they find ways to stop costly rapid refinances of veterans’ loans.

The warnings stem from a probe by Ginnie Mae, a government-owned corporation that makes mortgages cheaper by protecting bond investors against homeowner defaults. Ginnie Mae guarantees about $2 trillion in bonds containing loans backed by agencies including the Department of Veterans Affairs.

Some lenders have boosted their revenue through repeated, unneeded refinancing of veterans’ home loans, according to regulators. That process, called “churning,” lowers prices investors are willing to pay for bonds, effectively raising rates for veterans, first-time home buyers and others whose loans are included in Ginnie Mae-backed securities.
The targeted lenders include NewDay Financial and Nations Lending Corp., which were given 30 days to respond to the letter, according to a person familiar with the matter. Others, including Freedom Mortgage Corp., LLC and Flagstar Bank, were given 60 days, according to the person.
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San Diego County’s Median Home Price Dips

The San Diego County median home price was $529,000 in January, down by $11,000 since December, said real estate tracker CoreLogic on Tuesday.

The big picture: In a year, the median price increased 6.9 percent. San Diego County’s median home price hit an all-time high in June of $545,000. While January’s median is not far from the record, it might take a while to return to that level.

How prices could change: Rising interest rates and other factors could slow the pace of home price increases in the coming year, some experts say.

“The price is already pretty high and now you put higher interests rates on top of that,” said Alan Gin, economist at University of San Diego. “That’s going put home purchases out of reach for some people.”

The rate for a 30-year fixed mortgage was 4.52 percent Tuesday, up from around 4 percent at the end of last year, said Mortgage News Daily.

Mark Goldman, a real estate lecturer at San Diego State University, said he expected median price increases to slow as the market comes down from last year’s highs.

“The market is slowing down, in general,” Goldman said. “Prices are topping out and I don’t see a reversal. (Prices last year) were increasing at a very aggressive rate.”

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3 mortgage lenders will allow Airbnb income on refis

For the first time, homeowners who rent their primary residence on Airbnb can include their hosting income on mortgage applications when they refinance their existing loans with three lenders, including giant Quicken Loans.

Fannie Mae has agreed to back the loans and, if all goes well after a 90-day trial with the three lenders, “make it broadly available,” said Jonathan Lawless, Fannie’s vice president of product development and affordable housing.

This will be the first time that Fannie has considered income from a borrower’s home, rather than a separate rental property, on mortgage applications. It also represents a big step in recognizing income from the gig economy.

“We’re not just a W-2 economy anymore,” said Bob Walters, president and chief operating officer of Quicken Loans.

The loans cannot exceed Fannie’s loan limits, which range from $453,100 in most places to $679,650 in high-cost counties, including most of the Bay Area. Borrowers must meet other Fannie requirements, including a minimum credit score of 620.

The other lenders in the pilot project are Citizens Bank and Better Mortgage. Borrowers do not need to have an existing mortgage with the three lenders to refinance with them.

Fannie has agreed to the trial because Airbnb can verify income claimed on the refi applications. Borrowers must submit proof of income from Airbnb.

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