High-quality endorsements and lower-than-expected prepayment speeds have given a slight boost to the FHA Mutual Mortgage Insurance Fund in the second quarter of 2011 even as agency officials remained cautiously optimistic about the recent book of business. In its quarterly report, the Department of Housing and Urban Development said that the MMI fund’s total capital improved by $100 million to $31.7 billion from the previous quarter as revenues from premiums and property sales exceeded higher claims payments. Endorsements in the second quarter alone added $1.7 billion to the capital reserve account, which stood at $2.8 billion at the end of June, the report noted. The FHA capital reserve account, which absorbs ...

Ginnie Mae is following its own path in exploring potential changes to servicer compensation, a project that parallels the Federal Housing Finance Agency’s Joint Initiative on Fannie Mae/Freddie Mac servicing compensation. As part of the FHA’s effort to improve default servicing, Ginnie Mae and other government housing agencies will be working separately to develop better claims mechanisms and pooling services as well as clearer risk and warranty delineations to improve the value of securitizations, the FHFA said. In a discussion paper, the FHFA, which oversees Fannie Mae, Freddie Mac and the Federal Home Loan Banks, said ...

A proposed FHA rule on “seller concessions” recently listed as withdrawn from the Office of Information and Regulatory Affairs’ review process is now being cleared for issuance by the Department of Housing and Urban Development. FHA spokesman Lemar Wooley clarified that the long-awaited proposal was not withdrawn as reported but “delayed” as a routine requirement for an Economic Impact analysis. “But now it is moving again,” he explained in an email. “It is in the clearance process and we hope to publish a proposed rule before the end of the year. According to Wooley, the proposed rule would ...

The FHA is seeking legal opinion on whether Congress can grant it authority to bar any former executive of a defunct lender from participating in FHA programs for material violation of agency requirements. The Department of Housing and Urban Development’s Office of General Counsel is pondering the question in the wake of an internal report on the FHA’s inability to prevent former executives of defunct mortgage companies that failed to indemnify HUD on FHA losses from reentering the FHA program. The report from HUD’s Inspector General said 12 corporate officers have signed on to new mortgage firms with ...

Expanding approved lenders’ reach in originating FHA-insured single-family mortgage loans is a “positive step” in improving their ability to compete with non-approved and sponsored FHA originators, according to industry participants. The recently revised FHA policy eliminates the geographical restrictions imposed upon direct endorsement lenders, which limited their FHA originations to designated lending areas. Under the new policy, loan origination and servicing may be conducted from an approved lender’s home office, branch office or direct lending branch office. HUD no longer has to approve a lender’s branch office facilities. However, all office facilities, regardless of type, must ...

The Department of Housing and Urban Development is testing an alternative method for keeping extremely distressed FHA borrowers in their home until a suitable resolution is found. Dubbed the Mortgage Acquisition and Disposition Initiative, or “601 – Note Sales Program,” the strategy is being implemented on a pilot basis to help stabilize communities while bringing value to the FHA Mutual Mortgage Insurance Fund, said Acting Assistant Secretary for Housing/FHA Commissioner Carol Galante. Testifying before the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity this week, Galante said ...

A report on 2010 mortgage lending activity under the Home Mortgage Disclosure Act further confirms data that government-backed lending and overall purchase lending are falling – which may stall economic recovery, according to industry observers. While FHA and VA loans continue to account for a historically large proportion of loans, such lending fell more than did other types of lending, said the Federal Reserve in its analysis of the latest HMDA data. On a yearly basis, home purchase lending in 2010 was down almost 9 percent from 2009 and 62 percent lower than in 2006, when nearly 712,000 purchase mortgages were originated, the Fed said. The volume of home-purchase originations fell ...

In an ironic twist, six financial institutions with market shares below 2.0 percent showed increased originations of VA loans in the second quarter of 2011, while most of the top 25 VA lenders fared poorly. Total second quarter originations of the top VA lenders fell 19.5 percent to $9.67 billion, while volume for all VA lenders dropped 12.9 percent to $15.8 billion from the previous quarter. The top 25 lenders accounted for 61.2 percent of new VA loans made during the period. Despite their mixed performance, the top five VA lenders accounted for a hefty 40.4 percent of loans in the second quarter. Wells Fargo led ...

Wells Fargo and Bank of America continued to dominate the FHA market, accounting for 19.1 percent of total FHA originations in August, according to Inside FHA Lending’s analysis of agency data. Top-ranked Wells Fargo and second-place BofA accounted for $3.07 billion of the $16.06 billion in FHA-insured mortgages produced by approved lenders in August. The August volume was up 8.7 percent from July but down 34.0 percent on a year-over-year basis. In-house originations accounted for 70.9 percent of volume while home purchase loans made up 79.3 percent of loans made to borrowers during the month. An estimated 93.6 percent of loans insured by FHA were ...

A regional inspector general report found “material underwriting deficiencies” in a clump of FHA loans originated by Countrywide Financial, and though Bank of America may end up paying about $1 million to settle the charges, the case could be a harbinger of bigger losses to come. The Department of Housing and Urban Development inspector general for five upper midwest states singled out Countrywide for an audit because the company’s average default-to-claim rate was high for the region. The IG audited just 14 FHA loans, but half of them contained material underwriting deficiencies, mostly failing to...