Department of Housing and Urban Development Secretary Shaun Donovan this week told Congress that the FHA is considering a number of policy options, including further premium increases, to bolster the long-term health of the Mutual Mortgage Insurance Fund. Testifying before the House Financial Services Committee, Donovan said he expects to address premium increases in HUD’s FY 2013 budget proposal given the concerns raised by lawmakers regarding the impact of the reinstated maximum loan limits on the FHA’s declining capital reserves. Having higher loan limits than Fannie Mae and Freddie Mac will result in ...

Contrary to what critics claim about the recent increase in the FHA’s loan limits, high-balance mortgage loans insured by FHA have shown historically lower delinquency rates and, therefore, pose no significant risk to taxpayers or the FHA Mutual Mortgage Insurance Fund, said Department of Housing and Urban Development Secretary Shaun Donovan. Notwithstanding the agency’s opposition to legislation reinstating the pre-Oct. 1 temporary maximum loan limits for FHA, Donovan said early evidence, so far, shows that high-balance loans perform better than other FHA-insured loans. Last month, Congress enacted legislation reinstating ...

Jumbo lenders do not expect the higher FHA loan limits to have any adverse impact on their GSE business. Anyone seeking a loan above $625,500 only has one choice, and that is FHA, but the real question is how much business the conventional market would lose to FHA, lenders said. In addition to the higher loan limit, the FHA insures loans of more than 80 percent loan-to-value ratio and requires a 3.5 percent downpayment. The GSEs require a 20 percent downpayment on their jumbos. On the other hand, the private market offers loans above the GSE limits but does not originate loans in excess of 80 percent LTV. “For people seeking under-80 LTV loans, it is unlikely that ... [Includes one data chart]

President Obama has signed legislation returning funding fees for VA loans to their pre-Nov. 18 levels. The fees specified in H.R. 674, the 3 Percent Withholding, Repeal and Job Creation Act of 2011, are valid through Sept. 30, 2016. Signed on Nov. 21, the bill ends industry confusion over the amount of fees lenders should charge borrowers since the Department of Veterans Affairs, in a case of bad timing, issued new regulations in September to lower the fees. This was before Congress announced its intention to introduce legislation that will extend the higher fees through 2016. Under updated guidance issued by ... [includes one chart]

The Office of the Comptroller of the Currency last week reported that 12 bank and thrift mortgage servicers are pressing ahead to comply with the foreclosure practices consent orders issued in April, but it will take all of next year to complete the necessary steps. “Work is well under way on the actions necessary to comply with the consent orders,” the OCC said in a report. “Efforts to correct deficiencies in foreclosure processes, management oversight and internal audit are furthest advanced.” To forward the process of identifying and providing remediation to...

Rep. Barney Frank, co-author of the Dodd-Frank Wall Street Reform and Consumer Protection Act, will not run for office when his term expires in 2012. The Massachusetts Democrat also served as the ranking minority member on the House Financial Services Committee. Frank said during a press conference this week that his decision not to run again “was precipitated, but not caused by, redistricting.” A member of Congress since 1980, the 71-year-old lawmaker pledged to remain an advocate for the two causes he views as most important: the protection of financial reform and the...

Documenting mortgage lender and broker compliance with the Federal Reserve’s loan originator compensation rule will be just as important as actually complying with it, according to top industry attorneys and state regulators. “Compliance policies and procedures are really not enough” to satisfy the LO comp rule, Richard Andreano, a partner in the Washington, DC, office of the Patton Boggs law firm, told participants in a webinar sponsored this week by Inside Mortgage Finance. “The ability to document compliance will be very important, and people will need to maintain very...

Housing finance and real estate groups are hailing the enactment this week of legislation raising the size of mortgage loans insured by FHA to $729,750 or 125 percent of area median home prices over objections by conservatives and most Republicans. The reinstated loan limit formula and maximum cap for FHA-insured home loans are good through 2013. The loan limits for Fannie Mae and Freddie Mac will remain at 115 percent of local area median home price, up to $625,500. The FHA floor will remain at $271,050 while the floor for loans purchased by the government-sponsored enterprises will still be $417,000. Last month...

ABS issuers are scrambling to get a handle on complex new rules to mitigate conflicts of interest in the structured finance market that are being developed by the Securities and Exchange Commission and federal banking regulators. “At the end of the day, we’ll spend lots of time figuring out how to comply,” said Bianca Russo, managing director and associate general counsel at JPMorgan Chase, during a seminar sponsored last week by the American Securitization Forum. “It’s going to be a challenge to comply, however the rules turn out.” Complexity and consistency are...

Legislative proposals for a TBA market backed by non-agency MBS as an alternative to a market driven by government-sponsored enterprises lack precedence and are full of unknowns, according to analysts. “While this is a laudable effort – and a necessary one in order to remove the government’s sup-port from the housing finance market – the extent to which private enterprise will be able to pick up the slack the GSEs leave behind is unknown,” said Benjamin Feldman, a housing policy analyst and advocate. Peter Wallison, an Arthur F. Burns fellow in financial...