The FHA and the Department of Justice have ramped up enforcement actions against more than a dozen mortgage lenders in recent weeks for alleged agency rule violations. At least two of the lenders have received notices from the DOJ that they are in violation of the False Claims Act. According to the Collingwood Group, a Washington-based business advisory firm, the agencies have sent notices of enforcement or “administrative” actions to as many as 15 FHA direct endorsement (DE) lenders, some of whom could lose their DE status if found to have engaged in improper lending practices that resulted in huge losses for the FHA. The latest enforcement actions have ...

The Department of Housing and Urban Development’s Office of the Inspector General is drafting legislative recommendations to strengthen the FHA’s ability to mitigate risk and recover losses to the insurance fund. Testifying recently before Senate appropriators, HUD Inspector General David Montoya said he strongly agrees with HUD on the need for legislation to help the FHA act more quickly and decisively in response to market changes and avoid losses that can accrue during a long rulemaking process. He said the FHA has been too slow in addressing its financial problems. Based on past experience with the FHA over the years, Montoya said ...

Rep. Darrell Issa, R-CA, chairman of the House Committee on Oversight and Government Reform, is planning to quiz top FHA officials about an apparently deliberate effort by the agency to withhold important information from Congress regarding the true financial health of the FHA insurance fund. In a recent letter to FHA Commissioner Carol Galante, Issa said that the stress test employed by Integrated Financial Engineering in its FY 2012 actuarial review of the FHA Mutual Mortgage Insurance Fund yielded a more troubling result than what HUD reported to Congress in November last year. In the actuarial review, IFE reported that ...

Wells Fargo has reached an agreement with the Department of Housing and Urban Development and fair housing advocacy groups to improve its handling of foreclosed and abandoned homes and resolve allegations of discrimination in the maintenance and marketing of real estate-owned properties. The National Fair Housing Alliance and several other fair housing groups filed a complaint with HUD in April last year after observing that Wells’ foreclosed homes in minority neighborhoods did not receive the same treatment and care as the bank’s REO properties in white neighborhoods. The NFHA, which conducted an ...

The Department of Housing and Urban Development and the reverse mortgage lending industry lauded the U.S. House of Representatives this week for passing bipartisan legislation that would allow the agency to make immediate, necessary changes to the Home Equity Conversion Mortgage Program while working simultaneously on implementing regulations. H.R. 2167, the Reverse Mortgage Stabilization Act of 2012, passed by voice vote after it was added to the House “suspension” calendar, which limits debate on noncontroversial bills for quick passage. Co-sponsored by Reps. Denny Heck, D-WA, and Mike Fitzpatrick, R-PA, the bill responds ...

The likelihood of new loans exceeding the statutory “high-priced mortgage loan” (HPML) threshold due to a recent policy change relating to FHA mortgage insurance premium payments is causing uneasiness among some lenders, said an industry trade group. This week, the Consumer Mortgage Coalition warned that lenders might not originate FHA-insured loans if they thought the new MIP policy would cause the mortgages to turn into HPMLs and subject them to increased liability. Specifically, the new MIP policy might prevent ...

The FHA’s net-worth requirement, now fully phased in nearly three years since it was revised, will help ensure that only responsible, well-capitalized lenders and mortgagees are involved in the origination of FHA-insured loans. However, small FHA lenders may get squeezed out in the process. On May 20, the second and final phase of FHA’s new net-worth rule became effective. The final rule provides that, regardless of size, all applicants for FHA approval and those with current approval must have a ...

Lenders are at odds with housing finance agencies over the benefits of a new FHA guidance, which calls for documentation of downpayment assistance (DA) that HFAs provide to borrowers. The new guidance requires mortgagees to show written proof that funds provided by a federal, state or local government entity to help borrowers meet the FHA’s 3.5 percent minimum cash investment requirement actually came from the entity and not from some impermissible source. The guidance follows up on a rule issued by HUD last year clarifying an interpretation of the National Housing Act. The rule expressed HUD’s view that ...

A recent Federal Reserve survey of bank lending practices further confirmed a continuing trend among FHA lenders of refusing to lend to borrowers with FICO scores below 620 even though they qualify for the loan and could afford the required minimum 3.5 percent cash investment. About a third of senior loan officers who responded to the April 2013 survey indicated they were less likely to approve FHA home-purchase loan applications within the 580-620 FICO range this year compared to last year. They prefer lending to borrowers with a 720 FICO and who are making a 10 to 20 percent downpayment, the survey showed. An estimated 75 percent of banks cited the ...

The Texas House of Representatives has approved legislation that will let voters decide on Nov. 5 whether to allow home-equity purchase lending in the Lone Star State. The bill would amend the Texas constitution to authorize Home Equity Conversion Mortgage for Purchase loans, which would make the program available to Texans for the first time. The state legislature voted 139 to 1 in favor of Senate Joint Resolution 18, which the Texas Senate approved unanimously in March. Specifically, the bill would amend the state constitution to ... [One chart]