FHA originations dropped while the rest of the mortgage market, powered by a new wave of refinancing, posted gains during the third quarter, according to an Inside FHA Lending analysis of agency originations data. FHA lenders reported an estimated $145.7 billion in direct endorsements in the third quarter, down 3.7 percent from the previous quarter. This was in stark contrast to VA loan production, which was up an impressive 31.0 percent to $20.7 billion, and new single-family securitization by Fannie Mae and Freddie Mac, which rose 14.4 percent to $177.2 billion over the same period. Even the private mortgage insurance sector, FHA’s direct competitor, outdid ... [Includes one data chart]

FHA claims rose in 2011 from last year with loss mitigation and property conveyances accounting for the bulk of paid claims, according to Inside FHA Lending’s analysis of FHA fiscal year data. Though increasing by 7.7 percent, claims are still far below the 15.0 percent average for FHA loans, said an agency spokesperson. On Sept. 30, servicers reported 635,096 mortgages in serious default, yielding a default rate of 8.7 percent. This fiscal year, FHA reported 326,892 claims, of which 200,808 were loss mitigation-related and 91,448 were property conveyance actions. Claims related to pre-foreclosure sales and Home Equity Conversion Mortgage loans showed the most ...

The Department of Housing and Urban Development is seeking executive clearance for a final rule which would revise and update requirements for lender indemnification, lender-insurance eligibility and termination under the FHA’s Single-Family Lender Insurance Process. The final rule was sent to the Office of Management and Budget for review on Oct. 18 with possible issuance in the next couple of weeks. HUD declined to discuss the details of the final rule. The three main changes to the program include a more explicit definition of what ...

Allowing direct lenders in the Farm Credit System to participate in FHA mortgage insurance programs as approved mortgagees and lenders may not present a true picture of credit availability in rural areas and could end up costing taxpayers, the Mortgage Bankers Association warned. In a recent letter to HUD’s Office of Lender Activities and Program Compliance, the MBA added that the proposal may be in conflict with the administration’s goal of reducing government participation in the housing finance market. Steve O’Connor, MBA senior vice president, said Farm Credit loans with their implicit government guarantee and FHA-insured loans with their explicit government warranty would ...

Home Equity Conversion Mortgage lenders may now use certain financial assessment criteria in qualifying consumers for a HECM loan prior to FHA’s publication of its own guidance. Officials from the Department of Housing and Urban Development broke the news during the recent National Reverse Mortgage Lenders Association annual conference in Boston. They said the new underwriting assessment tool would help ensure borrowers can pay required taxes and insurance on their homes. The notification followed the unveiling of the NRMLA’s recommended underwriting guidance. In a previous email notice to industry participants, Acting Assistant Secretary of Housing/FHA Commissioner Carol Galante indicated that ...

Federal prosecutors this week sued an FHA lender to recover hundreds of millions of dollars in paid claims in connection with mortgage loans originated through branches that were not approved by the Department of Housing and Urban Development. A lawsuit filed by the U.S. Attorney in Manhattan district court this week alleged that Allied Home Mortgage Corp., President and CEO Jim Hodge and Executive Vice President Jeanne Stell engaged in reckless mortgage lending, flouted FHA mortgage insurance requirements and repeatedly lied about compliance. Such actions, the suit alleged, subsequently led to...

U.S. Attorney General Eric Holder has been called upon to take the lead in investigating allegations that a number of the largest mortgage lenders in the country may have systematically charged illegal fees to military veterans who refinanced their homes. Sen. Jon Tester, D-MT, a member of the Senate Committee on Veterans’ Affairs, sent a letter to Holder recently requesting he get involved in a probe to determine the veracity of the accusations. Earlier this month, a complaint was unsealed in federal court in which two whistleblower types accused the lenders of charging refinance fees that are...

The mortgage lending industry is more likely to see a return to higher FHA loan limits than higher Fannie Mae and Freddie Mac limits, after the Senate gave its approval to legislation that would restore higher conforming loan levels all the way around, according to one top industry lobbyist. Late last week, the Senate voted 60-38 to approve a federal spending bill that included an amendment sponsored by Sens. Bob Menendez, D-NJ, and Johnny Isakson, R-GA, that would reinstate the higher loan limits for the government-sponsored enterprises and the FHA that ended on Sept. 30. Those limits dropped from a maximum of...

President Obama nominated Carol Galante to become the next Commissioner of the FHA, an agency that continues to adjust to a bigger role in the mortgage market. Galante has served as deputy assistant secretary for multifamily housing at the Department of Housing and Urban Development since 2009 and has filled in as acting FHA commissioner since the departure of David Stevens. She worked for nearly a quarter of a century at BRIDGE Housing, a company that specializes in affordable housing development. Galante definitely has the management and leadership experience for the post, said Brian Chappelle, co-founder of Potomac Partners LLC. “If...

Several large banks and mortgage companies are accused of cheating military veterans and taxpayers out of millions of dollars by hiding illegal fees in VA refinance transactions and of deliberately misleading the government to obtain guarantees for the refinanced loans. Three law firms – Butler Wooten & Fryhofer and Wilbanks & Bridges in Atlanta and Phillips & Cohen in Washington, D.C. – have teamed up to pursue the “qui tam” or whistleblower lawsuit on behalf of two mortgage brokers and the U.S. government. The brokers, Victor Bibby and Brian Donnelly, brought the lawsuit under the False Claims Act, a federal law that goes back to the Civil War when it was used to ...