The FHA has extended the filing deadline for lender recertification to June 9, 2014, to match the agency’s timeline for switching to the Lender Electronic Assessment Portal (LEAP). LEAP is a new system that will serve as a one-stop shop for all lender approval and recertifications. It replaces the current “Lender Approval” and “Cash Flow” web pages in FHA Connection as well as the current system lenders use to submit financial information as part of recertification. LEAP is scheduled to be fully operation this month, although consolidation of Title I and II lender identification numbers has already taken place on March 31. Last year, the FHA issued guidance extending the filing deadline for all lenders with a December 2013 fiscal year end. Although the guidance recommended that lenders be prepared to complete their recertification no later than May 31, it also stated that ...

HMBS Quarterly Issuance Down by 30 Percent. Issuance of securitized Home Equity Conversion Mortgages remained low as HMBS issuers created only $510.1 million in new HMBS pools during March, the third lowest total in almost five years, according to the latest market analysis by New View Advisors. This brought HMBS issuance in the first quarter of 2014 to $1.7 billion, the lowest quarterly total in nearly five years, said NVA. By comparison, HMBS issuance totaled $2.5 billion in the fourth quarter of 2013 and $2.4 billion in the first quarter of 2014. 1Q14 has the lowest HMBS issuance since 2Q09, when the program was at its infancy. In March, 86 HMBS pools consisting of 41 original issuances and 45 tail pools were issued. Original HMBS issuances refer to a pool of HECM loans securitized for the first time, while tail HMBS issuances are pools created from the uncertificated portions of HECMs that have ...

Fannie Mae and Freddie Mac securitized just $29.95 billion of single-family mortgages with private mortgage-insurance coverage during the first quarter of 2014, a 30.9 percent decline from the previous period, according to a new Inside Mortgage Finance analysis and ranking. The steepness of the private MI downturn was in line with the 29.1 percent downturn in overall business at the two government-sponsored enterprises from the fourth quarter of 2013. And the flow of private MI loans in early 2014 was down 40.2 percent from the first quarter of last year, a less severe drop than the 63.7 swoon in the overall GSE market over that period. The biggest decline in MI-insured business was in underwater mortgages that were refinanced while keeping their existing coverage under the Home Affordable Refinance Program...[Includes two data charts]

FHA Commissioner Carol Galante has rejected mortgage industry calls to lower mortgage insurance premiums, saying that while the Mutual Mortgage Insurance Fund is on the mend it still has not fully recovered from the impact of massive legacy losses. Speaking at the Mortgage Bankers Association National Advocacy Conference in Washington, DC, this week, Galante said the Department of Housing and Urban Development is currently focused on strengthening the fund and expanding access to credit for all qualified borrowers. She reminded lenders that mortgage premium increases – five hikes from 2008 to 2013 – were necessary to protect the MMIF and properly price for the risk the FHA is assuming. “The MMI Fund is...

Affordable housing advocates are praising the leadership of the Senate Banking, Housing and Urban Affairs Committee for including a “robust dedicated source of revenue” for the National Housing Trust Fund in their bipartisan housing-finance reform legislation. A provision of the legislation filed by Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, would expand both the base and the rate for the National Housing Trust Fund and the Capital Magnet Fund. Current law provides...

Origination of FHA-insured reverse mortgages fell in the fourth quarter as borrowing costs increased and loan amounts shrank due to tighter agency rules for these loan products, according to Inside FHA Lending’s analysis of agency data. The FHA reported $15.3 billion Home Equity Conversion Morgages originations for 2013, which was up 20.6 percent from $12.7 billion in 2012. Production, however, fell 12.6 percent quarter over quarter as policy changes designed to stabilize the ailing Mutual Mortgage Insurance Fund and help ensure that HECM borrowers can sustain themselves for longer periods of time took effect on Sept. 30. The changes include limiting disbursements at loan closing, or during the initial 12 months after closing, to 60 percent of the initial principal limit. Borrowers who draw more than 60 percent will pay ... [1 chart]

Lenders are cautiously expanding their guidelines on FHA lending by reducing its minimum credit score to below 580 to qualify borrowers. Carrington Mortgage Servicers this week joined a cadre of some 80 FHA lenders that have lowered their minimum FICO scores and eased their overlays to better focus on borrowers, particularly those below the 640 FICO range. The Santa Ana, CA-based lender is doing it not only for its FHA business but also for its VA and USDA loan programs. Carrington lowered its minimum FICO score to 550 for FHA loans, showing more aggressiveness than Wells Fargo, which moved its own FHA FICO floor to 600 from 640 at the beginning of February for purchase mortgages originated through its retail channel. The FHA currently requires a minimum credit score of 580 for most borrowers for 3.5 percent downpayment loans. Borrowers below 580 undergo more stringent manual underwriting and ...

Approved lenders should review thoroughly all information before submitting their mortgage insurance certificates (MIC) to FHA because there have been too many mistakes over the past year, the agency warned. In the latest issue of Lender Insight, the FHA said lender requests to correct information on MICs have been more frequent than expected. Of the MIC corrections the FHA has reviewed, 81.5 percent stemmed from the agency’s Lender Insurance program. An MIC is a document issued by the Department of Housing and Urban Development as proof that FHA has insured a mortgage loan, and that a contract of mortgage insurance exists between the lender and HUD/FHA that incorporates agency regulations. A loan is considered as having no FHA insurance if it does not receive an MIC, regardless of how it is closed. The FHA made clear that it is the lender’s responsibility to ensure that information ...

The Department of Housing and Urban Development has published a proposal to eliminate the requirement that an FHA borrower be required to pay interest even after the loan is prepaid. Specifically, the proposed change would prohibit FHA lenders from charging post-payment interest, allowing them instead to charge interest only through the date the mortgage is paid. The proposed rule change is necessary to avoid FHA loans being prohibited under new Consumer Financial Protection Bureau ability-to-repay rules and revised higher-cost loan regulations starting in January 2015. It effectively aligns FHA prepayment rules with the new CFPB rules. Comments on the proposal are due by May 12, 2014. The FHA currently allows lenders to charge interest for the full month if the borrower prepays on a date other than the installment due date. Regardless of whether the loan is FHA or non-FHA, there were complaints among borrowers that ...

The Association of American Retired Persons hit the Department of Housing and Urban Development again with another class-action lawsuit for allegedly failing to protect four surviving spouses of Home Equity Conversion Mortgage borrowers against foreclosure and eviction.The complaint was filed in the U.S. District Court for the District of Columbia, where last September a federal judge found HUD in violation of federal law in a similar case. The court remanded the case to HUD to determine the appropriate remedy for the problem. The AARP Foundation Litigation and the law firm of Mehri & Skalet, the same entities that successfully litigated last year’s reverse mortgage case, represented the plaintiffs, none of them younger than 65 years of age. The suit challenges HUD’s promulgation of HECM regulations, which allegedly is ...