Issuers of non-agency MBS and agency mortgage sellers have addressed most of the legacy representation and warranty issues that have bedeviled the market for the past few years, according to industry analysts. However, repurchase and buyback issues haven’t been completely resolved as investors and regulators make last grasps at recoveries. Analysts at Compass Point Analytics & Trading estimated that the total losses incurred for rep-and-warrant claims from Fannie Mae, Freddie Mac, the Federal Housing Finance Agency, the FHA and non-agency MBS investors by publicly traded U.S. originators still in existence will total $89.0 billion. The analysts said lenders have charged off or reserved $88.0 billion for such losses. Compass Point said...

FHA-approved lenders should make sure they leave no stones unturned to ensure that loans submitted for endorsement meet FHA’s strict underwriting criteria. It is the responsibility of direct endorsement lenders to scrutinize every loan for compliance with FHA lending guidelines, including income verification, credit analysis and property appraisals. JPMorgan Chase admitted it failed to do all of the above. Last week, the bank acknowledged it violated the False Claims Act and agreed to pay $614 million in cash to settle government charges it improperly certified poorly underwritten loans for FHA and VA guarantees. The defective loans later ...

The whistleblower whose investigative efforts led to the landmark $25 billion national mortgage settlement between the federal government, 49 state attorneys general and five of the largest mortgage servicers is at it again. This time, Lynn Szymoniak is suing 22 companies for using fraud to obtain FHA insurance – in some instances, VA guaranties – for defective loans that later were securitized through Ginnie Mae and sold to investors. Szymoniak, who is suing under the False Claims Act, gained notoriety from a 2011 interview on “60 Minutes” in which she ...

The Department of Housing and Urban Development has declared a one-month freeze on all mailed-in applications for FHA lender approval beginning March 31 as the department shifts from the current paper-based system to a new online electronic processing system. HUD said the blackout period would be from March 31 to April 30, during which system enhancements would be implemented, including replacement of the current Lender Assessment Sub-System (LASS) with the Lender Electronic Assessment Portal (LEAP), formerly known as “HUD/FHA Lender Approval Files.” The changes are ...

Buoyed by improvement in FHA loan quality, some lenders have begun lowering the credit score requirements for FHA and other government-backed mortgages. Last month, Wells Fargo alerted FHA lenders of its decision to lower the minimum credit score for purchase home loans through its retail channel from 640 to 600. “We felt it was an appropriate time to do it given the improvement in FHA loan quality,” a spokesman explained. “The change applies to all FHA borrowers. Last year’s resolution of the FHA indemnification issue also prompted the change at Wells Fargo, according to a bank official. In addition, resolving the putback risk with ...

VA activity appeared to lose momentum in the fourth quarter of 2013 as approved lenders reported $129.9 billion in total originations for the year, according to Inside FHA Lending’s analysis of Department of Veterans Affairs data. Production has been gradually slipping since the end of the first quarter, when lenders posted an aggregate $37.5 billion in new VA loans. The fourth quarter ended with $22.4 billion in total originations, which was down a hefty 32.1 percent from the previous quarter. On a year-over-year basis, however, VA originations were up by 1.5 percent. Refinancing accounted for 9.9 percent of VA production in 2013, up slightly from ... [1 chart]

NRMLA Plans to Recruit Certain Borrowers to Offer HECM Testimonials. Seeing so much negative publicity against reverse mortgages, the National Reverse Mortgage Lenders Association is planning to recruit borrowers who are willing to share with reporters their positive experiences with the product. The aim is to build a “repository” of borrowers who are willing to be interviewed by reporters on the merits of having a Home Equity Conversion Mortgage loan. Media representatives typically contact the NRMLA for borrower interviews, and having a borrower contact list would ...

The whistleblower who gained fame and a lot of money from suing major banks for “robo-signing” and other improper mortgage servicing practices has filed an amended lawsuit accusing 22 companies of defrauding the Department of Housing and Urban Development of billions of dollars in false FHA claims. Lynn Szymoniak, whose 2011 interview on “60 Minutes” blew the lid off improper servicing practices at some major banks, filed a qui tam, or whistleblower, lawsuit in the U.S. District Court of South Carolina last week alleging violations of the federal False Claims Act and state false claims statutes. Defendants include CitiMortgage, Wells Fargo Bank, Bank of America, Deutsche Bank, HSBC USA, JPMorgan Chase and U.S. Bank, as well as servicers, trustees, custodians and title companies. The lawsuit seeks...

Average credit scores and debt-to-income ratios on FHA mortgages loosened as 2013 progressed, according to an analysis by Inside Mortgage Finance. Lenders have gotten particularly aggressive regarding credit score requirements, and recent changes to FHA guidelines could prompt further loosening on DTI ratios. According to an Inside Mortgage Finance analysis of Ginnie Mae loan-level mortgage-backed security data, the average credit score on FHA loans was 706.1 in January. However, as FHA originations declined during the year, average credit scores on FHA loans also fell, hitting 685.4 in December. Average credit scores on FHA originations could continue...[Includes one data chart]

Total FHA delinquencies rose slightly while the percentage of seriously delinquent loans remained flat in the fourth quarter of 2013, according to an Inside FHA Lending analysis of FHA servicing data. Data showed delinquencies of 90 days or more remained unchanged at 8.1 percent from the previous quarter even as total FHA delinquencies increased a bit to 15.2 percent from 15.1 quarter over quarter. The share of loans that are 30-60 days behind on their payment also increased to 7.1 percent from 6.9 percent over the same period. As of Dec. 31, FHA servicers had a combined ... [1 chart]