Industry trade groups last week gave the Department of Housing and Urban Development another nudge to lift the moratorium on investor participation in the FHA 203(k) property rehabilitation program. Following up on an industry request in June, the Mortgage Bankers Association, the National Association of Realtors and the National Association of Home Builders in a joint letter to HUD reiterated the importance of the 203(k) program in reducing the current real estate-owned (REO) inventory and addressing the oversupply of housing. The groups said the program ...

Liquidity requirements apply only to the required minimum net worth of FHA-approved lenders and mortgagees, not to their total net worth, according to a final rule issued recently by the Department of Housing and Urban Development. The rule clarifies language in FHA regulations, which has caused some confusion and anxiety among approved lenders, lawyers and other regulators, said HUD. HUD made clear that the rule simply requires FHA lenders to ...

The Department of Housing and Urban Development has issued new rules for qualifying borrowers who list Social Security income on their application for an FHA-insured mortgage loan.The number of FHA borrowers with verified Social Security income is unknown because HUD does not track borrowers’ source of income, according to a department spokesperson. But industry observers said the number may not be significant. Nonetheless, lenders would need to request several important documents from borrowers who would rely on SS income to qualify for an FHA home loan, the new rules state. These documents include ...

As some aggregators scale back or add overlays to their FHA Streamline Refinance mortgage loans, First Mortgage Corp. stands out because of its confident approach to the product. While other lenders impose overlays or charge more for the additional risk, FMC, an FHA-approved direct lender in Ontario, CA, imposes no restrictions on streamline refinancing other than those required by FHA guidelines. “First Mortgage prides itself in serving historically underserved borrowers and so we have a commitment to underwrite loans to FHA guidelines for the most part,” said FMC spokesperson Sharon Magnuson. The FHA streamline refi program allows certain borrowers ...

FHA jumbo activity kicked into high gear in the second quarter of 2012 as originations jumped more than 30 percent from the first quarter, Inside FHA Lending’s analysis of FHA data showed. The volume of FHA loans exceeding $417,000 totaled $6.33 billion in the second quarter, up from $4.78 billion during the first quarter. FHA jumbo production was robust during the first half of the year as the top lenders reported $11.1 billion in total originations, which was 9.1 percent more compared to the same period a year ago. Purchase jumbo loans accounted for ...

$7.5 Million FHA Mortgage Fraud Scheme. The Department of Justice has filed charges against top executives of a real estate brokerage for their participation in a mortgage fraud scheme that may cost the FHA $7.5 million in losses. Indictments were unsealed earlier this month in Manhattan federal court charging Mitchell Cohen and Erin Davis, the owner and sales manager, respectively, of Buy-A-Home, a real estate brokerage business in Queens, NY. The criminal charges follow a civil fraud lawsuit filed by the U.S. Attorney’s Office for the Southern District of New York last December against ...

The streamlined short sale programs announced last week by Fannie Mae and Freddie Mac could increase losses on bank holdings of second liens, according to industry analysts. The changes, directed by the Federal Housing Finance Agency, include the ability for the government-sponsored enterprises to offer up to $6,000 to second-lien holders to expedite a short sale. “Previously, second-lien holders could slow down the short sale process by negotiating for higher amounts,” the FHFA said. Overall ...

Ocwen Financial announced last week that its executive chairman has relocated to the U.S. Virgin Islands as part of the company’s efforts to reduce its tax rate. William Erbey, the executive chairman of Ocwen, said the company worked for nearly three years on the tax maneuver, which will reduce Ocwen’s effective tax rate by more than half. The strategy included the establishment of a new corporation, Ocwen Mortgage Servicing, in February. The wholly owned subsidiary of Ocwen was formed under the laws of ...

The Treasury Department’s surprise announcement late last week that it will now “sweep” up any and all future profits from Fannie Mae and Freddie Mac in lieu of the dividends the GSEs had been paying in return for taxpayer support solves some problems but creates new ones, industry observers say. Rather than continue to borrow from the Treasury to make dividend payments to the Treasury – as the GSEs have since they were placed in conservatorship in September 2008 – the revised preferred stock purchase agreements will replace the 10 percent quarterly dividend with a “full income sweep” of “every dollar of profit that each firm earns going forward,” according to Michael Stegman, counselor to the Treasury for Housing Finance Policy.

The Federal Housing Finance Agency this week announced that Fannie Mae and Freddie Mac will implement new short sale guidelines that expand eligibility criteria, as well as align and consolidate existing GSE short sales programs into one standard offering. The new guidelines, which go into effect Nov. 1, will permit homeowners with a Fannie or Freddie mortgage to sell their home in a short sale even if they are current on their mortgage, provided they have an eligible hardship.