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 ...

A coalition of 34 industry trade and affordable housing groups, housing and community reinvestment advocates has endorsed the nomination of Carol Galante as the Department of Housing and Urban Development’s deputy assistant secretary for housing and FHA commissioner.In a recent letter to both the chair and ranking minority member of the Senate Committee on Banking, Housing and Urban Affairs, the coalition voiced its strong support for Galante, who is currently serving in both positions on an acting basis. The coalition cited Galante’s experience as well as her previous job as HUD assistant secretary for multifamily housing. Her backers also point to her 31-year experience in private real estate as president and chief executive of BRIDGE Housing, California’s largest nonprofit housing development corporation, and its affiliate companies. In particular, the coalition underscored ...

The seasonally adjusted delinquency rates for single-family FHA and VA mortgage loans fell in the third quarter of 2011 as did those for all other first-lien residential mortgages covered by the Mortgage Bankers Association’s National Delinquency Survey. According to the survey, the third quarter saw a 45-basis point drop – from 8.44 percent to 7.99 percent – from the previous quarter in overall delinquencies on a seasonally adjusted basis. For FHA loans, the rate declined 53 bps to 12.09 percent from 12.62 percent, while VA’s rate fell 47 basis points to 6.58 percent from 7.05 percent. On a year-over-year basis, the seasonally adjusted delinquency rate decreased ...

Private mortgage insurers are moving to adopt policies to fit with the recently expanded Home Affordable Refinance Program offered by Fannie Mae, Freddie Mac and the Federal Housing Finance Agency. Genworth Financial said that it’s all in, announcing last week that its U.S. mortgage insurance business is making changes so it can fully support HARP 2.0. The upgraded changes to HARP from the two government-sponsored enterprises are designed to enable more underwater borrowers to refinance their residential mortgages at today’s record-low interest rates. Genworth says the changes...

Freddie Mac is unwrapping a new set of incentives for its HomeSteps properties to both homebuyers and real estate agents this winter in an effort to pick up the sales pace of the GSE’s real-estate owned inventory.Through January 31, 2012, Freddie is offering homebuyers up to 3 percent of the final sales price toward closing costs while selling agents representing the owner-occupant buyer would receive a $1,000 bonus under the incentive plan.

One of the goals in the recent revisions to the Home Affordable Refinance Program is to stimulate more interest among lenders, largely through relaxed requirements on representations and warranties and some streamlining of the process. But HARP 2.0 also includes new guidelines on soliciting potential customers, both from the lender’s own portfolio and from borrowers currently serviced by another firm. A handful of lenders have begun touting the expanded program to consumers. The new program includes specific refi solicitation practices that lenders must...

Although primary market lenders will face fewer hurdles in originating refinance loans for underwater Fannie Mae and Freddie Mac borrowers, detailed guidelines released by the government-sponsored enterprises this week confirm that it will take several months before the expanded programs are fully implemented. And when they are, the revamped Home Affordable Refinance Program will generate up to one million new loans that otherwise wouldn’t have happened, according to estimates by Keefe, Bruyette & Woods. That’s just about what the market expected, and it will mean... (Includes one data chart)

The FHA Mutual Mortgage Insurance Fund for single-family loans again fell short of minimum capital standards, spurring renewed warnings of a taxpayer bailout if losses continue to mount. According to FHA’s annual report to Congress on its financial status and the condition of the MMI Fund, reserves dropped to 0.24 percent in 2011 from 0.50 percent last year. This means that the agency is holding only $2.6 billion of excess reserves, down from $4.7 billion the year before, against roughly $1.1 trillion of FHA-insured loans. The report also noted that unless housing prices stabilize and losses drop, the fund has a 50 percent chance of a taxpayer bailout. The negative effects in the report’s “base case” scenario were caused by ...

The fallout from Taylor, Bean & Whitaker’s collapse in 2009 continues to haunt Ginnie Mae after a recent independent auditor’s report found a potential overstatement of the agency’s portfolio of mortgages-held-for-investment (MHFI) apparently linked to the TBW debacle.The report by Clifton Gunderson, a Fairfax, VA-based certified public accounting firm, attributes the apparent portfolio anomaly to the current document custodian’s failure to complete a review and provide a final certification on the non-performing TBW loans. Ginnie Mae repurchased the loans from the defaulted TBW mortgage-backed securities pools and reclassified them as MHFIs. Overall, independent auditors signed off on Ginnie Mae’s FY 2011 balance sheet and found no material weaknesses in internal control over financial reporting or any instance of noncompliance. Auditors, however, noted ...