Closing and origination costs on a sample $200,000 purchase mortgage rose by almost 9 percent in 2011 nationwide, according to a survey by Bankrate, an online aggregator of financial rate information. In its annual closing cost survey, the group found that nationwide closing costs averaged $4,070, up from $3,741 last year. New York’s closing costs were highest at $6,183, followed by Texas at $4,944 and Utah at $4,906 on the same size mortgage. Arkansas had the lowest closing costs with $3,378, followed by ...

Mortgage lenders operating as a “series limited liability company” should reevaluate the structure in the wake of an enforcement action by the Department of Housing and Urban Development against an FHA lender alleging violation of FHA branch rules and the Real Estate Settlement Procedures Act. A recent settlement agreement between HUD and Prospect Mortgage of Sherman Oaks, CA, could be the wake-up call for other mortgage companies that use a series limited liability company, or a “series LLC,” to originate FHA-insured loans, according to compliance experts. Lenders may have to decide whether to ...

Without clear, early implementation guidance from the Department of Housing and Urban Development, FHA mortgage lenders could start underwriting to the lower loan limits before the Oct. 1 effective date, limiting the origination of FHA loans, warned two real estate industry groups. Providing guidance to mortgage lenders on how to manage the transition from the current top-end amount of $729,750 to $625,500 for high-cost areas without disrupting FHA lending is critical, the Mortgage Bankers Association and the National Association of Home Builders wrote to HUD. Lenders manage their pipelines based on ...

The Department of Housing and Urban Development is mulling over changes for the FHA TOTAL Scorecard to increase scrutiny of loans with higher debt-to-income ratios, according to HUD officials. Responding to inquiries by Inside FHA Lending, department officials said the FHA automated underwriting system, FHA TOTAL Scorecard, is under review for possible changes that could have mixed results for lenders and consumers. HUD said it is still considering the effects of various potential changes to TOTAL. But making those changes would result in higher risk loans, including those with higher DTI ratios, being subjected to manual reviews rather than...

Raising the annual mortgage premium by 25 basis points has resulted in some reduction in FHA lending but not so dramatic as to send lenders reeling from its impact. Industry reaction to premium adjustment has been mixed as the effects were felt in both the 15- and 30-year fixed-rate loan products. “Application levels have gone down as FHA products become more and more costly,” said one FHA lender. The quarter-of-a-percentage point increase became effective for all new 15- and 30-year mortgage loans insured by FHA on or after April 18, 2011. The upfront mortgage insurance premium (MIP) of 1.0 percent remains unchanged. The premium increase does not affect...

Some FHA lenders have been easing off on FICO credit scores to qualify more borrowers but they are also adding other requirements to ensure borrower eligibility and ability to repay. Frost Mortgage Banking Group, a subsidiary of Primary Residential Mortgage Inc., began relaxing its credit score overlays in January and results have been encouraging, said Greg Frost, company president and chief executive officer. The action has so far resulted in a 95 percent approval rate on mortgages sent for a second review to the parent company, PRMI. The approach has had a positive effect on 20 percent to 25 percent of FHA loans that were initially...

The Department of Justice has charged three mortgage loan officers and a title agent with defrauding elderly borrowers, financial institutions and the Department of Housing and Urban Development out of $2.5 million in a large-scale reverse mortgage and loan modification scam. The accused loan officers – Louis Gendason, John Incandela and Marcos Echevarria, all Florida residents – and Kimberly Mackey, a title agent in Pittsburgh, allegedly conspired to commit wire fraud by using HUD’s Home-Equity Conversion Mortgage program to target seniors with promises to refinance their existing mortgages. The three loan officers allegedly inflated the...

The Department of Housing and Urban Development recently stripped three mortgage lenders of their FHA Direct Endorsement (DE) approval for having default and claim rates in excess of what the department normally allows on nationwide and local levels. Prior to the termination of their DE approval, the lenders were placed on FHA Credit Watch for evaluation following an audit that uncovered their unusually high default and claim rates within the areas they serve. HUD regulations call for the termination of an FHA lender’s DE approval and origination agreement if the default and claim rate for loans endorsed within the preceding 24 months exceeds...

President Obama has named Carol Galante as acting FHA commissioner and assistant secretary for housing at the Department of Housing and Urban Development. Galante was most recently HUD deputy assistant secretary for multifamily housing. She will replace Robert Ryan, who most recently also served as Acting FHA Commissioner and Assistant Housing Secretary. Ryan will become senior advisor to HUD Secretary Shaun Donovan on housing finance matters. In his new expanded role, Ryan will serve as HUD’s leaderon the interagency housing deputies’ team. He will develop, among other things, the department’s view regarding a long-term plan for...

Ginnie Mae has revised guidance for determining whether a loan is eligible for its mortgage-backed securities program. According to APM 11-12, effective for all securities with an issue date of June 1, and forward, all loans pooled in Ginnie Mae single-family securities must meet certain criteria. Only loans backing bond consolidation pools are exempt from the revised guidance. Beginning June 1, all loans underlying Ginnie Mae issuances must not be more than one month overdue and unpaid on the pooled mortgages. For example, if a Ginnie Mae MBS issued on Jan. 1 had a pooling date of Dec. 28, the loan must be paid through November in order to be...