Department of Housing and Urban Development Secretary Julian Castro faced the wrath of the GOP majority during a House Financial Services Committee hearing this week on the state of the FHA, focusing on the agency’s recent decision to cut annual mortgage insurance premiums. While Castro may have been warned about stepping into the lion’s den, he appeared ill-prepared for the confrontation with Republicans, unable to answer basic questions such as FHA’s net income, overall delinquency rate and the serious delinquency rate for 2014. Democrats, on the other hand, helped the embattled secretary regain his footing by expressing support for FHA’s efforts and putting perspective on some of FHA’s actions to strengthen the Mutual Mortgage Insurance Fund and help qualify more borrowers for FHA credit. Committee Chairman Jeb Hensarling, R-TX, set...

The Department of Housing and Urban Development declined to comment on the progress on revised policy drafts that may help reduce lender liability and ease back-end enforcement actions. The FHA is considering procedural changes aimed at easing lender liability to spur more FHA lending to qualified, underserved borrowers. Specifically, FHA is reportedly working to raise the bar on loan certification violations, making it harder to sue lenders for unintentional or technical mistakes. Such a change could spur...

New issuance of single-family MBS by Fannie Mae, Freddie Mac and Ginnie Mae fell 4.6 percent from December to January, according to a new Inside MBS & ABS ranking and analysis. The three agencies produced $85.18 billion of new single-family MBS last month. The good news is that was up a hefty 24.3 percent from January 2014; the bad news is January 2014 came toward the end of a nine-month swoon in agency MBS production. All of the decline in monthly MBS issuance resulted...[Includes two data charts]

Federal housing regulators once again sought authority from Congress to impose an administrative fee on lenders to support information technology improvements and administrative functions at the FHA – a bid Congress rejected last year. As part of President Obama’s FY 2016 budget, the Department of Housing and Urban Development is proposing to charge lenders up to $30 million in fees to cover FHA salaries and expenses and information technology upgrades. The IT component will focus on strengthening FHA’s risk-management efforts through expanded quality-control reviews, enhanced tools and other risk-management initiatives. Separately, the president requests an appropriation of $174 million in administrative costs to enable the FHA to implement a risk management and program-support process – both critical for FHA’s oversight of ...

Many industry executives are not impressed with the FHA’s 50 basis point premium reduction, suggesting that the new pricing would not have that big an impact on the mortgage market, according to a new survey by the Collingwood Group. Conducted from Jan. 12 to 21, 2015, the monthly survey said 47 percent thought that President Obama’s estimate of the number of borrowers benefiting from the cut – 250,000 – is too high. Approximately 34 percent said the estimate was “on the mark” and 19 percent said it was too low. In addition, 25 percent of respondents thought the premium reduction was more motivated by politics than a desire to implement a major change in the market. Those respondents who said “too high” also noted that FHA underwriting remains tough and that price differences are not large enough to steer borrowers to FHA. Respondents, however, agreed that ...

Reverse mortgage lenders now have the option to delay calling a Home Equity Conversion Mortgage due and payable where there is an eligible non-borrowing spouse and a case number assigned prior to Aug. 4, 2014. A delay would postpone foreclosure triggered by the death of the HECM borrower or the last surviving borrower and allow the qualified, non-borrowing spouse to stay in the house for a certain period until the HECM is resolved. Under revised FHA guidance, reverse mortgage lenders are allowed to assign eligible HECMs to the Department of Housing and Urban Development upon the death of the borrower. They have the option of foreclosing in accordance with the contract as endorsed or choose the “mortgagee optional election assignment (MOE).” MOE means the optional assignment selected by a lender for a HECM loan with an assigned FHA case number prior to ...

The Mortgage Bankers Association notched a win for small, independent issuers after the Financial Accounting Standards Board agreed with the group’s position on the accounting of seriously delinquent loans in Ginnie Mae pools. At issue is whether companies that service pools with loans that are 90 days or more delinquent should put those loans on their balance sheet even if they have no intention of buying the loans out of the pool. According to the MBA, a Big Four accounting firm issued controversial guidance which would have been burdensome for small mortgage-backed securities issuers that have limited funding and no incentive or history of buying defective loans out of pools. After months of exchanges, FASB staff finally agreed with the MBA’s view that the decision process involves two steps. First, a loan must be 90 days or more delinquent and trigger ...

Overall, 2014 was not a good year for FHA originations as tight underwriting and high loan costs narrowed the band of borrowers able to qualify for an FHA-insured residential loan, according to an Inside FHA Lending analysis of agency data. FHA total endorsements dropped to $35.2 billion, an 8.1 percent drop in the fourth quarter from the previous quarter, with fixed-rate and adjustable-rate mortgages declining by 7.9 percent and 12.7 percent, respectively. FHA purchase originations suffered a decline of 11.3 percent. There was one bright spot: FHA refinances rose a meager 2.2 percent while the percentage of conventional loans that refinanced into FHA saw a more substantial lift of 13.0 percent quarter to quarter. FHA baseline lending (below $417,000) saw volume drop 8.4 percent in the fourth quarter. FHA jumbo loan amounts up to the statutory high-cost loan limit and ... [ 2 charts ]

The FHA has updated the contents of a notice to delinquent borrowers regarding the availability of approved housing counseling and provided a new template for lenders to explain, in simple terms, the benefits of housing counseling. The latest guidance, Revised Notification to Homeowners of Availability of Housing Counseling Services (Mortgagee Letter 2015-04), also provides a description of counseling services to delinquent borrowers. The revised requirements supplement those outlined in previous mortgagee letters and certain provisions in the HUD handbook. Lenders must comply with the new requirements by April 4, 2015. FHA lenders must provide delinquent borrowers with a notice about the availability of housing counseling by an approved provider and the principal mortgage lender. However, there is no standard language for such notices Hence, the FHA has ...

The Department of Housing and Urban Development is once again asking for authority to charge lenders an administrative support fee to fund information technology upgrades and administrative functions at the FHA, a bid that was shot down by Congress last year. As part of the Obama administration’s fiscal 2016 budget proposal, HUD wants to charge lenders up to $30 million in fees, which would be credited as offsetting collections to the FHA’s Mutual Mortgage Insurance program account. The mortgage industry cautioned...