The agency watchdog wants HUD to pursue civil remedies against The Lending Company and impose fines for incorrectly certifying that mortgages were eligible for FHA insurance.
Warehouse lending executives say they are seeing their nonbank clients earn less money this summer, but noted that profits are still strong by historical levels.
HUD eliminated the standard 30-year, fixed-rate HECM in April because the default rate on the loans was about four times that of a non-HECM regular mortgage.
Paul Rozo, CEO of Paramount Residential Mortgage Group, said his companys application volume is down roughly 20 percent since rates jumped a few months back, but some of his competitors are seeing declines of up to 50 percent.
FHFA has been analyzing approaches for reducing Fannie Mae and Freddie Mac loan limits across the country, "and any such change would be announced with adequate advance notice for implementation on January 1, 2014" the regulator said.
Thomas Hoenig, vice chairman of the FDIC, said he is particularly interested in exploring the downpayment issue further. Securities investors are also likely to push for downpayment requirements for QRMs.