Private mortgage insurers provided coverage on some $8.2 billion of mortgages securitized by Fannie Mae and Freddie Mac during the first quarter of 2013 that had loan-to-value ratios exceeding 105 percent, according to a new Inside Mortgage Finance analysis of loan-level data. Private MIs had little choice in the matter since the Home Affordable Refinance Program allows underwater borrowers to refinance without getting additional MI, or any mortgage insurance if the original loan wasn’t insured. In fact, Fannie and Freddie securitized a total of $27.1 billion of mortgages with LTV ratios over 105 percent, most of which did not have insurance. But most private MI coverage was placed...[Includes one data chart]

The Department of Housing and Urban Development this week issued guidance that spells out procedures for demanding indemnification from lenders participating in the agency’s Lenders Insurance (LI) program for loans deemed ineligible for FHA insurance. The guidance (Mortgagee Letter 2013-10) implements regulation that HUD finalized in January 2012. Indemnification for defective LI loans became even more important for the FHA after an independent actuarial audit in November revealed a negative capital reserve ratio and that a taxpayer bailout seemed imminent. Compliance experts warned that, with the policy changes, the more than ...

Department of Housing and Urban Development Secretary Shaun Donovan this week reiterated his agency’s request for additional legislative authority to regulate the Home Equity Conversion Mortgage program by mortgagee letter so that much-needed changes can be implemented immediately. Rather than go through the tedious legislative process of amending HECM legislation to improve the program and reduce HECM losses, expanding HUD’s authority would enable the department to undertake immediate reforms, such as restricting lump sum payments, requiring financial assessments of HECM applicants and requiring borrowers to ...

The Department of Justice recently announced enforcement actions against a New York-based FHA lender and its owner/president for fraudulent certification of FHA-insured loans as well as two separate settlements with bank subsidiaries for alleged violations of the Servicemembers Civil Relief Act. In the first action, the U.S. Attorney for the Southern District of New York, the Department of Housing and Urban Development, and the HUD Office of the Inspector General jointly announced a civil mortgage fraud lawsuit against ...

The Department of Housing and Urban Development’s Mortgagee Review Board slapped 157 FHA lenders during the first nine months of 2012 with various administrative actions, including more than $1.7 million in civil money penalties and indemnifications to HUD for paid and potential claim losses totaling $1.25 million. The MRB, which is HUD’s disciplinary arm, took action against the approved lenders from Jan. 1, 2012, to Sept. 30, 2012. According to a notice published in the April 11 Federal Register, the board withdrew the FHA approval of 130 lenders for failing to ...

Supervised small FHA lenders and mortgagees with less than $500 million in consolidated assets would enjoy some cost relief under a regulatory proposal that would exclude them from submitting audited financial statements. Instead, these institutions would only need to submit their unaudited financial regulatory reports, which include bank and credit union call reports, to fulfill their net worth reporting obligations with the Department of Housing and Urban Development. That is the same exclusion the federal banking agencies – the Federal Reserve Board, Federal Deposit Insurance Corp., and the National Credit Union Administration – give ...

Private mortgage insurers may soon find themselves required to meet new eligibility standards if they want to continue doing business with the government-sponsored enterprises. In written testimony submitted to the Senate Committee on Banking, Housing and Urban Affairs, FHFA Acting Director Edward DeMarco said the FHFA intends to set new criteria for private MI companies in doing business with Fannie Mae and Freddie Mac. The revised private MI standards are among the agency’s priorities in 2013 and is part of the conservatorship strategic plan to ...

Ginnie Mae is seeking feedback from dealers, issuers and investors about whether to continue to maintain two separate mortgage-backed securities programs or to consolidate them under a single security. Comments are also being sought on other possible options. Bloomberg.com recently reported that Ginnie Mae sent out questionnaires to Wall Street broker-dealers for their input on the future of both the Ginnie Mae I and Ginnie Mae II MBS programs. The agency has been considering whether it should merge the programs for some time. The Ginnie Mae I single-issuer pool program with stringent pooling requirements began in ...

The overall delinquency rate among FHA-insured portfolios dropped during the first three months of 2013 while little change was seen in the foreclosure rate quarter over quarter, according to an Inside FHA Lending analysis of FHA data. Top FHA servicer data showed that 15.3 percent of the more than 7.68 million active FHA-insured loans were delinquent as of the end of the first quarter. Although elevated, that percentage was down from the 16.9 percent overall delinquency rate reported by FHA servicers at the end of the fourth quarter last year. The share of FHA-insured mortgages in foreclosure remained flat from quarter to quarter, a sign that the housing crisis may have ... [1 chart]

VA Issues Warning. Loans reported for guaranty more than 60 days after loan closing will be subject to automatic full review, the Department of Veterans Affairs warned. In guidance issued earlier this month, the VA reminded lenders that they must enter guaranty requests in the VA’s webLGY system within 60 days of closing or risk going through another review and additional requirements. If a loan is guaranteed late, the lender must include a brief explanation and a certification that the loan was current when they submitted the file to VA. Timely reporting of loans for VA guaranty ensures ...