The FHA’s total capital resources dipped slightly by $400 million in the last three months of 2011, but things could have been much worse had it not been for lower claims activity, according to the FHA’s quarterly report to Congress on Mutual Mortgage Insurance Fund programs. On balance, the report shows little change and nothing unexpected during the quarter, said industry participants. The much-anticipated changes will come after two FHA premium adjustments become effective on April 1 – an annual mortgage insurance premium increase of 10 basis points and a 75 bps hike in upfront premiums, they said. The upfront premium increase is expected to ...

The FHA would have more flexibility to adjust its insurance premiums and greater latitude to require lender indemnification under legislation approved by the House Financial Services Committee this week. The committee passed H.R. 4264, the FHA Emergency Fiscal Solvency Act of 2012, by voice vote on March 27, sending the measure to the House floor for consideration later this year. The bill is slightly different from the initial draft the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity passed on Feb. 7, according to the bill’s author, Rep. Judy Biggert, R-IL. Under the bill, approved lenders may ...

Perceived inaccuracies in public discussions about the FHA’s health and the way the agency manages its business have prompted Acting FHA Commissioner Carol Galante to address the issues and answer critics. In a posting on the Department of Housing and Urban Development’s official blog this week, Galante said the FHA is “moving in the right direction” and that the Mutual Mortgage Insurance Fund is in a much better shape than it was in 2009. Critics have raised concerns about FHA’s solvency, citing the current level of capital reserves, which have fallen way below the ...

Despite the steps taken recently by the Department of Housing and Urban Development to shore up the FHA insurance fund, concerns remain as to whether such actions are enough to make up for FHA’s losses and restore the agency’s mandatory 2.0 percent capital reserve ratio in a timely manner, according to HUD’s top internal auditor. Testifying before the House Committee on Appropriations this week, HUD Inspector General David Montoya warned further actions might be necessary to ensure the stability of the FHA Mutual Mortgage Insurance Fund and reduce its risks. For example, FHA now uses credit scores to ...

A Texas-based mortgage lender that recently lost its approval to originate and underwrite FHA loans sued in state court to compel the Department of Housing and Urban Development to withdraw an announcement of the enforcement action. AmericanHomeKey filed the complaint in Dallas County Court to force the withdrawal of a March 23 HUD press release announcing the immediate and permanent revocation of the lender’s FHA authority to originate, underwrite and close new mortgages with FHA insurance. The lender said a premature announcement would ruin its relationship with investors and result in massive losses. The HUD Mortgagee Review Board announced ...

FHA loan production declined by 11.0 percent in February from the previous month but increased 1.2 percent from a year ago, according to Inside FHA Lending’s analysis of FHA data. Approved lenders reported $15.2 billion in new FHA-insured loans in February, down from $17.1 billion the previous month but up from $15.0 billion in the same month last year. In-house originations accounted for the lion’s share of FHA originations, 78.2 percent, for the month, while purchase mortgages made up the bulk of FHA endorsements at 55.1 percent. An estimated 97.1 percent were ... [1 Chart]

Homebuyers rely on real estate agents to recommend specific lenders in about one-third of the mortgage-financed home purchases now taking place in the U.S. housing market. And despite the fact that many real estate brokerage firms have some sort of partnership with specific lenders, relatively little business appears to be generated by these arrangements. These are some of the major findings contained in a comprehensive new study of the home purchase mortgage market and the role real estate agents play in generating mortgage business for lenders. The study, “Key Factors in the Referral of Homebuyers to...

The $25.0 billion settlement involving five bank servicers includes refinance eligibility requirements that differ from the settlement’s loan modification program. Only portfolio loans are eligible to meet the settlement’s refi requirements, unlike the mod program, which includes portfolio loans, mortgages in non-agency mortgage-backed securities and FHA loans. Under the pending settlement with 49 state attorneys general and the federal government, Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo must dedicate $2.78 billion toward refis for certain borrowers with negative equity ...

Flagstar Bank’s recent $133 million settlement with the Department of Justice to resolve fraudulent FHA lending practices could increase lender overlays on the FHA product, resulting in fewer borrowers being able to qualify for an FHA-insured loan, according to analysts. The Flagstar settlement, which came in the wake of the $25 billion national settlement between servicers and state and federal agencies, exacerbates the situation for lenders that already have previous concerns about the severity of FHA fines, including treble damages, for violations of FHA’s highly complex and technical rules, analysts said. Whatever relief FHA lenders may have drawn from the robo-signing settlement was ...

Significant price cuts to the FHA’s Streamline Refinance Program will not hurt the Mortgage Mutual Insurance Fund but will, in fact, benefit from the lower pricing in the long term, said Acting FHA Commissioner Carol Galante.Testifying last week before the Senate Appropriations Subcommittee on Transportation, Housing and Urban Development and Related Agencies, Galante said the pricing cuts to encourage streamline refinancing as well as upfront and annual mortgage insurance premium increases for forward and jumbo mortgages will generate an additional $1 billion this fiscal year and next, in addition to projections in the president’s FY2013 budget. According to Galante, the FY2013 budget proposal ...