FHA forward originations increased modestly in the second quarter while Home Equity Conversion Mortgage production hit its lowest three-month volume since late 2012. Forward endorsements totaled $51.6 billion in the second quarter, up 5.4 percent from the previous period. It was a different story, however, at midyear where volume was down 16.6 percent from the previous year. Fixed-rate mortgages accounted for the majority of FHA forwards produced from April through June, ending the quarter with $51.3 billion, up 5.1 percent from the first three months of 2018. FHA adjustable-rate mortgages posted a whopping 88.7 percent increase to end the quarter with $307.4 million. FHA purchase activity rose 19.7 percent, closing the quarter with $41.7 billion, while streamlined refinancing dropped 41.3 percent from the prior period. Conventional-to-FHA refi business also was off ... [Charts]

The Mortgage Bankers Association is seeking clarification from FHA on a number of issues in the agency’s Single Family Housing Policy Handbook following Brian Montgomery’s swear-in as FHA commissioner. The MBA identified seven priority issues which lenders say need further guidance. The issues include the following: Deferred Action for Childhood Arrivals and employment authorization documents; Third-party underwriting and vendor verification of borrower income, employment, and assets; Student loan debt calculation; Rent below fair market; Minimum decision credit scores; Contract for deed; and Community transfer fees. In September 2017, President Trump rescinded DACA, a special program created by the Obama administration to provide temporary legal status and work permits to underage persons who entered the U.S. illegally until the government decides ...

It has been more than three years since FHA introduced a new streamlined process of identifying loan defects and their severity to minimize or avoid enforcement action and hefty penalties under the False Claims Act. Despite calls by the mortgage industry to improve and clarify the process – the Single-Family Loan Quality Assessment methodology or “defect taxonomy” – the FHA has yet to make a move to meet industry demands for more detailed defect taxonomy. Contacted for an update on the defect taxonomy, a Housing and Urban Development spokesperson said simply, “Nothing to report on this.” An outgrowth of lender concern over the government’s indiscriminate use of the FCA to prosecute mortgage fraud and recover FHA losses, the defect taxonomy establishes nine categories of loan defects in loans it endorses. The nine defect categories replaced the 99 loan defect codes that were ...

Approximately 11.5 percent of FHA single-family mortgages were in some stages of delinquency in July, 26 basis points down from the previous month, according to an Inside FHA/VA Lending analysis of FHA delinquency rates. At the end of July, FHA servicers were servicing 7,901,090 FHA loans, with top servicer Wells Fargo accounting for 19.2 percent. The share of FHA mortgages that were 30-59 days past due, which is considered early-stage delinquency, was 4.8 percent at the end of July. The share of FHA loans 60-89 days delinquent was 1.6 percent while the share of seriously delinquent loans in July was 4.02 percent. ... [Chart]

Michael Bright Clears First Hurdle to Becoming President of GNMA. The Senate Committee on Banking, Housing and Urban Affairs this week voted to confirm Michael Bright as president of Ginnie Mae. Bright’s confirmation is broadly positive for housing, said Jaret Seiberg, financial services and housing policy analyst for Cowen Washington Research Group. Bright is a former staffer for Sen. Bob Corker, R-TN, and has a history of working well with Republicans and Democrats, said Seiberg. In addition, he has worked closely with Sen. Elizabeth Warren in cracking down on loan churning, he added. The Mortgage Bankers Association welcomed the news. “Mr. Bright would bring significant experience within the mortgage industry and on Capitol Hill to the role of Ginnie Mae president,” said Bill Kilmer, the group’s chief lobbyist. “He has demonstrated a commitment to bipartisan solutions regarding complex ...

A Treasury Department report called on the Department of Housing and Urban Development to establish clear standards for determining which mortgage-related violations and loan defects the Department of Justice should pursue under the False Claims Act. The report also recommended that DOJ ensure that materiality, for purposes of the FCA, is linked to the standards of the agency administering the program to which the claim has been filed. Furthermore, it urged both HUD and the DOJ to work together to clarify the process by which they can jointly resolve claims. The report was issued pursuant to President Trump’s February 2017 executive order establishing his administration’s policy to regulate the U.S. financial system according to a set of core principles. Both HUD and the DOJ have been successful in using the statute to prosecute FHA lenders who knowingly commit fraud or make ...

On Aug. 1, the U.S. Senate voted 92-6 to pass a four-bill appropriations package that includes FY 2019 funding for the Department of Housing and Urban Development and the U.S. Department of Agriculture housing programs. The bill passed without changes to program funding levels previously approved by Senate appropriators. The House Appropriations Committee has approved FY19 spending bills for both HUD and USDA. The full House, which is away for the summer break until Sept. 4, has not yet voted on the package. The Senate bill retains the previous fiscal year’s $400 billion in new loan commitments in the FHA Mutual Mortgage Insurance Fund and $30 billion for the general insurance and special risk insurance program, which include special purpose single- and multifamily loans, multifamily rental housing and condominiums. The bill also sets aside $550 billion for Ginnie Mae ...

Lenders will be asking the Department of Housing and Urban Development to clarify the eligibility of borrowers with deferred immigration status for an FHA-insured loan. A mortgage industry trade group is currently drafting a letter on “a series of technical FHA handbook recommendations,” including greater clarity on loan applications submitted by borrowers registered under the government’s Deferred Action for Childhood Arrivals (DACA) program. DACA status was offered to children who were brought illegally into the U.S. by their parents or guardians but have been in the country for most of their lives. The program was created by the Obama administration as a way for recipients to work legally in the country while Congress could agree on what to do with them. The program faces uncertainty after President Trump rescinded it in September last year as part of his administration’s zero-tolerance immigration ...

More than half of FHA-insured loans analyzed for material defects have been mitigated over a 12-month period, according to the Department of Housing and Urban Development’s latest quarterly loan-review analysis. Approximately 31,396 loans were analyzed over four quarters for possible defects, beginning in the third quarter of 2017 and ending the second quarter of 2018. Approximately 59.8 percent of the reviewed loans were initially deemed unacceptable. HUD data showed that most, 54.1 percent, of the loans reviewed have been successfully mitigated. The report provides a quarter-by-quarter snapshot of the FHA’s Loan Review System results. Net defects represent outcomes after lenders have implemented methods and techniques to mitigate or remediate the initial findings. Of the reviewed loans, 24.7 percent were conforming while 15.5 percent were found to be deficient. About 0.2 percent of loans were ...

The U.S. District Court for the Southern District of Iowa earlier this month granted preliminary approval of an $11.2 million settlement in a proposed class-action against national bank JPMorgan Chase. According to the complaint filed in 2016, Chase charged and collected interest on FHA-insured loans that paid off early. Chase was either the lender or the servicer of the loans. The lawsuit, Audino et al. v. JPMorgan Chase Bank, alleges that the bank breached the promissory notes underlying the class’s FHA-insured home loans when it collected post-payment interest without providing disclosures to borrowers who made a prepayment inquiry, request for payoff figures, or tender of prepayment. Plaintiffs allege that the bank did not use the proper FHA form to provide the disclosures to consumers. Chase denies any wrongdoing and neither admits nor concedes any actual or potential fault or liability. The bank also denies it was ...