Revised HUD/VA Addendum to the Uniform Residential Loan Application. On July 30, the FHA has posted on its HUDCLIPS website a revised Addendum to the Uniform Residential Loan Application (Form HUD-92900-A/VA Form 26-1802). This form is used for both FHA and VA mortgage originations.The Department of Veterans Affairs has updated its form to clarify what constitutes a valid marriage for the purpose of obtaining VA benefits. Although the changes to the form do not apply to FHA-insured mortgages specifically, lenders should begin using the revised form for new FHA mortgage originations as soon as possible, the FHA recommended. Processing Request for Execution of VA Quitclaim Deeds. The Department of Veterans Affairs has issued guidance (Circular 26-14-19) for handling of requests for execution of quitclaim deeds. A quitclaim deed is a legal document that is used to transfer a person’s rights to real estate to ...

FHA Commissioner Carol Galante has announced plans to step down from her current post, leaving behind a Mutual Mortgage Insurance Fund that appears well on its way to recovery and a slumping FHA business. Industry response to Galante’s Aug. 12 announcement was mixed. Some stakeholders applauded her toughness and resolve in steering FHA through hard times, while others criticized her for policies that made it more difficult and costly for first-time homebuyers to obtain an FHA-insured mortgage loan. Galante’s nearly three-and-a-half year stint as FHA commissioner was highlighted by her efforts to stabilize the FHA’s ailing Mutual Mortgage Insurance Fund, reduce losses and improve lender oversight. She achieved these goals by creating a comprehensive risk-management structure at FHA, revamping FHA pricing and credit policies, and ...

The Department of Housing and Urban Development failed to bill lenders for 486 loans with enforceable indemnification agreements that created losses for the FHA, according to the HUD Inspector General. The loans were originated between 2004 and 2014 and were either in the Accelerated Claims Disposition program or the Claims Without Conveyance of Title program, or they went into default before an indemnification agreement expired. Due to procedural errors and apparent lack of oversight, HUD failed to recover $37.1 million for 486 loans that had enforceable indemnification agreements. The unbilled loans represented 8.0 percent of total activity in the programs during that period. In addition, HUD did not ensure that indemnification agreements were extended to 64 of 2,078 loans that were streamline financed. As a result, HUD incurred losses of ...

The False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) not only have become strong enforcement tools in the fight against FHA mortgage fraud but also an efficient means of recovering taxpayer losses. Having used both federal statutes effectively to wrangle huge settlements from large banks, federal prosecutors now have their eyes set on mid-level banks, according to compliance experts during a recent webinar hosted by Inside Mortgage Finance Publications. “Because these FCA [and FIRREA] lawsuits have been a cash cow for the Department of Justice and the Inspector General of the Department of Housing and Urban Development, I think these agencies will target mid-level banks next,” said ...

Weighed down by high premium costs and lender overlays, FHA lost more primary market share to private mortgage insurers and the Department of Veterans Affairs during the second quarter of 2014. Although June’s FHA endorsement numbers have not yet been released, the trend seen in April through May, along with Ginnie Mae securitization data, suggest that FHA business was up a modest 11.5 percent from the first quarter. But that increase provides no comfort to FHA, which saw its market share go down to 33.7 percent, a six-year low. From April to May, FHA forward endorsements rose by 2.4 percent to $10.61 billion. On a year-over-year basis, however, endorsements were down from $21.9 billion in May 2013, according to an Inside FHA Lending analysis of agency data. On the other hand, private MI companies reported a total of $44.19 billion of new insurance written (NIW) during the ... [2 charts]

Two industry trade groups expressed support for consolidating Ginnie Mae’s mortgage-backed securities program and creating a new MBS but they are at loggerheads on some of the details. Commenting on the Ginnie Mae proposal, the Securities Industry and Financial Markets Association (SIFMA) and the Mortgage Bankers Association (MBA) said the disagreements are mostly on how to resolve issues related to winding down the Ginnie Mae I MBS program and providing a conversion option for existing securities. “It is clear that further discussion is warranted, and direct engagement with key stakeholders should be beneficial,” the trade groups suggested. Ginnie Mae has received considerable support from a variety of industry players for its “straw man” proposal to shift to a single MBS program based on the existing Ginnie II. The program now accounts for more than 90 percent of all ...

Reverse mortgages would be included in Home Mortgage Disclosure Act reports under a proposed rule published recently by the Consumer Financial Protection Bureau. The proposed rule would expand the definition of a “covered loan” under HMDA to include reverse mortgages and home-equity lines of credit (HELOCs), which include reverse mortgages structured as open-end HELOCs. Currently, HMDA regulations do not require reporting of HELOCs, although lenders may do so if they choose. Currently, financial institutions only have to report information on a closed-end reverse mortgage if the transaction involves a home purchase, home improvement or refinancing. Among other things, the CFPB has proposed to require that all reverse mortgages and HELOCs be identified by loan type to distinguish them from other categories of ...

For FHA lenders, the idea of a large lender exiting the FHA market and creating opportunities for market share has been overshadowed by concerns regarding liability in the wake of recent fraud-related settlements between lenders and the federal government. Compliance experts said many of their FHA clients are quietly reassessing their FHA business after JPMorgan CEO Jamie Dimon, during a recent earnings call, spoke out loudly against the government’s stringent enforcement actions aimed at recovering “wrongfully” claimed funds. Lenders fear that FHA enforcement actions have taken a turn for the worse in recent years, and that even errors that have nothing to do with loan default are construed as fraud by government prosecutors, resulting in billion-dollar penalties against FHA lenders. Seven major banks, so far, have paid ...

Twenty-five lenders either settled or lost their FHA approval for a full year because they failed to complete their annual recertification requirement, while 21 others were subjected to enforcement actions because their origination or servicing files did not meet FHA requirements. Results from cases heard by the Department of Housing and Urban Development’s Mortgagee Review Board in 2012 and 2013 showed that the board used all enforcement tools at its disposal. Specifically, the board took the following actions: Assessed money penalties of more than $1.5 million; imposed fees, refunds and principal buydowns totaling $1.2 million; required indemnification on 163 FHA-insured loans; withdrew FHA approval of four lenders; suspended the FHA approval of one lender; and placed one lender’s approval on probation. Violations were related to ...

The FHA’s widespread reduction in loan limits for 2014 has had a mixed impact on production levels so far this year, according to a new Inside FHA Lending analysis of FHA endorsement data. Through the first four months of 2014, FHA endorsements were down 55.6 percent from the same period last year. But in counties where loan limits were lowered, FHA production was down 57.5 percent from early 2013. In the relatively few counties where loan limits actually increased in 2014, FHA endorsements were also down from a year ago, but by a less severe 47.4 percent. The biggest decline in endorsements has been in refinances, especially FHA-to-FHA refinances. In areas with lowered loan limits, production of these loans has plummeted 87.0 percent, and even areas with raised loan limits saw an 81.1 percent drop in streamlined refis. Purchase-mortgage originations have taken less of a ...