With industry and lawmakers focused on the confirmation hearing next week of President-elect Donald Trump’s nominee to head the Department of Housing and Urban Development, speculation as to who might become Dr. Ben Carson’s top deputy and FHA commissioner has apparently eased. After weeks of speculation, the list for HUD deputy secretary is down to three rumored contenders: Brian Montgomery, former assistant secretary and FHA commissioner; Pam Patenaude, president of the J. Ronald Terwilliger Foundation for Housing America’s Families; and Rick Lazio, a former congressman from New York and a housing finance attorney. Like Montgomery, Patenaude has experience at HUD, serving as assistant deputy secretary for field policy and management. She has extensive experience in housing as an executive vice president at Urban Land Institute and director of housing policy with the ...

United Shore Financial Services of Troy, MI, has agreed to pay $48 million to resolve allegations of FHA-related fraud, adding to the more than $7 billion in settlements and judgments the Department of Justice has collected since 2009. United Shore, parent company of United Wholesale Mortgage and Shore Mortgage, was accused of improperly originating mortgages and falsely certifying compliance with FHA requirements. Originated between Jan. 1, 2006, and Dec. 31, 2011, the loans eventually turned bad, resulting in significant losses to the FHA insurance fund. The complaint did not specify the number and total amount of the bad loans United Shore originated or the size of FHA’s losses on those loans. United Shore was charged with violation of the False Claims Act, becoming the latest financial institution to join a growing list of FHA lenders that have opted to settle, rather than litigate, ...

VA Extends Making Home Affordable Program. The Department of Veterans Affairs has extended the Making Home Affordable program to Oct. 1, 2017. The program was set to expire on Jan. 1, 2017. USDA Approves NewFed Mortgage to originate Section 52 Guaranteed Rural Housing Loans. The U.S. Department of Agriculture has approved NewFed Mortgage Corp., a multi-state residential mortgage lender, to originate USDA loans. Based in Danvers, MA, retailer NewFed offers FHA, VA, USDA, conventional and jumbo mortgage products. Reviews Genworth Financial’s Proposed Sale to Chinese Conglomerate. Fannie Mae has approved Arch Capital’s acquisition of ...

The FHA’s 203(k) Property, Repair and Rehabilitation program saw a significant increase in activity in the third quarter of 2016, both relative to the previous quarter and from the same period a year ago. Origination of FHA-insured fixer-upper loans jumped 16.2 percent from the previous quarter, bringing the nine-month production total to $2.4 billion. On a year-over-year basis, volume rose 6.9 percent. The top five FHA 203(k) lenders saw a 52.5 percent increase in originations in the third quarter, totaling $202.1 million. Year-over-year, production by the same group was off by 13.1 percent. Purchase loans accounted for $2.2 billion of 203(k) mortgages originated by lenders over the nine-month period while refinance rehab loans accounted for $237.9 million. Billion-dollar weather and climate disasters may have contributed to the surge in 203(k) business. As of September 2016, 12 weather and ... [Chart]

The Congressional Budget Office is looking for ways to reduce the budget impact of government-backed mortgage programs and recommends that Fannie Mae and Freddie Mac increase their guarantee fees and/or significantly lower their loan limits. But the CBO admits those changes would result in raising the cost to borrowers and could potentially restrain the housing market. Under CBO scorekeeping, MBS guarantees provided by the two government-sponsored enterprises from 2017 to 2026 will cost the government $12 billion. Reducing subsidies also would help renew private sector participation in the secondary market, the CBO said. It proposes...

The government-backed lending market is heading into a year of uncertainty, not knowing whether things will get better or worse under a Trump administration, according to stakeholders. The recent increase in the loan limits for FHA and VA mortgages is expected to have marginal to moderate results for originations, given the tight housing market and rising interest rates, stakeholders noted. Some lenders predict that the benefits of the loan limit increases for FHA and VA will be incremental, particularly in high-cost markets where it is difficult for borrowers to obtain Fannie Mae and Freddie Mac loans. Overall, the Mortgage Bankers Association forecasts a decline in total mortgage originations in 2017, driven by a sharp drop in refinances. However, Michael Fratantoni, MBA senior vice president and chief economist, is predicting 10 percent growth in purchase volume next year, the ...

FHA will no longer perform pre-closing reviews of loans prior to endorsement, according to an agency notice published in the Federal Register this week. Rather, a lender applying for direct endorsement (DE) authority will be required to submit loan files for FHA’s pre-endorsement review only after closing. After determining the mortgage’s eligibility, FHA will notify the lender of the loan’s endorsement. Although the notice’s effective date is Jan. 13, 2017, lenders will be required to submit only closed mortgages for pre-endorsement review on or after April 1, 2017. FHA said it is providing a four-month grace period so that applicants for DE authority will have sufficient time to prepare for the switch. The agency is currently adjusting its systems to accommodate the change. Lenders will be updated periodically about these modifications prior to April 1. Lenders that enter the ...

FHA reverse mortgage lenders capped the third quarter of 2016 with a 2.2 percent volume increase over the previous quarter, ending the first nine months with $11.0 billion in new Home Equity Conversion Mortgage loans. The year-over-year story, however, was different, as nine-month originations fell 10.5 percent from the same period last year. Purchase HECMs comprised the bulk of originations, 86.3 percent. Unlike in FY 2015, when the Mutual Mortgage Insurance Fund’s healthy HECM portfolio helped pushed the capital reserve ratio above the statutory 2.0 percent requirement, the portfolio appeared to be in bad shape in FY 2016. The fiscal 2016 actuarial audit of the MMIF projected a negative $7.7 billion economic value for the HECM program, dramatically down from last year’s estimated $6.8 billion. Auditors attributed the decline to adverse effects of “incorporating deeper ... [Chart]

The VA share of the government-insured market has increased substantially in 2016 as more veterans obtained VA loans, mostly through nonbank lenders. With the growth in VA business, however, comes increased risk exposure to thinly regulated nonbanks, which prompted Washington, DC-based think tank The Urban Institute to call for enhanced nonbank regulation. Given the thin capital and liquidity requirements under which nonbanks operate, it is important to address this risk, writes UI research associate Karan Kaul in an analysis. Unlike the FHA, which insures mortgages up to 100 percent of the loan amount, the VA only guarantees 25 percent of the loan amount, Kaul noted. If a loan defaults, the lender takes the hit on the remaining 75 percent of the loan balance, he added. “If the lender cannot fulfill [its] financial obligations, the VA – hence, taxpayers – pick up the ...

A recent ruling by Florida’s Fifth Court of Appeal, if finalized, will affect any FHA foreclosure case that references the Department of Housing and Urban Development’s mandatory face-to-face interview with borrowers, according to industry attorneys. In Palma v. JPMorgan Chase Bank, Nat’l Ass’n, et al., the state appellate court found that HUD’s face-to-face interview requirement is “a condition precedent to foreclosure” for Florida mortgages that specifically incorporate the HUD regulation. Prior to the decision, no Florida appellate court has held that HUD’s requirement constitutes a condition precedent to foreclosure, according to attorneys with the Richmond, VA, law firm McGuireWoods. “Although this decision is not yet final and rehearing is likely, it has far-reaching impacts on the conditions and evidence required for foreclosure trials throughout Florida and is the ...