The FHA has issued new, more permissive loss-mitigation guidelines for Home Equity Conversion Mortgages, including an optional extension for mortgagees when submitting due-and-payable requests. Additionally, the guidelines allow mortgagees to cure a HECM borrower’s taxes and/or insurance defaults as long as the FHA incurs no cost and the mortgagee agrees to refrain from seeking loan assignment for at least three years. The guidelines further remove a previous restriction prohibiting the use of the permissive loss-mitigation options announced in Mortgagee Letter 2015-11 for borrowers in foreclosure. Accordingly, for HECM loans that were in the process of foreclosure prior to the issuance of ML-2015-11, mortgagees may assess those borrowers for a repayment plan in accordance with the mortgagee letter. The repayment plan must have the ...

Cutting back on its FHA business helped reduce JPMorgan Chase’s foreclosure inventory but made it harder for the bank to meet its community reinvestment goals, according to the bank’s top executive. In a letter to shareholders, Jamie Dimon, president/CEO of JPMorgan Chase, said he would rather see the bank no longer service defaulted loans. “If we had our druthers, we would never service a defaulted mortgage again,” he wrote. “We do not want to be in the business of foreclosure because it is exceedingly painful for our customers, and it is difficult, costly and painful to us and our reputation.” Chase has cut back on FHA lending and has reinstated overlays in response to stiff penalties it paid to resolve False Claims Act allegations brought by the federal government. In 2014, Chase agreed to a $614 million settlement with the Department of Justice over allegations of ...

With only a few isolated exceptions, VA and FHA lending was up sharply across the country last year, outstripping the private mortgage insurance business in nearly every state of the U.S., according to a new analysis by Inside FHA/VA Lending. Overall, FHA single-family mortgages securitized by Ginnie Mae increased 60.5 percent from 2014 and VA production was up 39.4 percent. Meanwhile, Fannie Mae and Freddie Mac posted a more subdued 26.2 percent increase in privately-insured loan volume. California remained the biggest mortgage market for the FHA, VA and private MIs, as well as uninsured mortgages. The FHA clearly won the mortgage insurance battle, boosting its share of insured loans in the Golden State from 41.1 percent in 2014 to 49.2 percent last year thanks to a whopping 89.8 percent jump in business. California had one of the highest concentrations of ... [ 3 charts ]

Private mortgage insurers have announced changes in their premium rate structure to make their pricing more risk-based. The question is would this drive borrowers with lower credit scores toward FHA? Lenders say that while the private MI rate changes appear to make it more expensive for borrowers with lower credit scores to obtain a conventional mortgage, FHA’s life-of-loan policy could also cost borrowers more in the end. Analysts, too, are confident that private MI risk-adjusted pricing will not have any significant impact on FHA, positive or otherwise. Six private mortgage insurers have updated their premium rate cards in keeping with the new capital requirements under the government-sponsored enterprises’ Private Mortgage Insurer Eligibility Requirements (PMIERs) that were implemented in January 2016. The proposed rate changes are subject to ...

A clause in a New York home-purchase contract excluding government-backed financing from seller consideration is raising potential disparate impact concerns. A residential-lending manager in Sarasota, FL, emailed Inside FHA/VA Lending a copy of the contract with the controversial language embedded in Section 8 under the heading “Mortgage Commitment Contingency.” The paragraph read in part, “… institutional lender agrees to make a first loan other than a VA, FHA or other governmentally insured loan, to purchaser …”. “The language makes clear that no government-backed loans such as VA, FHA or USDA are acceptable to the seller [of the property],” the lender, who requested anonymity, said. “It is pretty rampant as cash is king and no one on the selling side wants to wait for payment.” Apparently, such clauses are nothing new. In fact, they have been around for ...

The FHA has issued emergency guidance for handling loan applications in areas affected by the water contamination crisis in Flint, MI, while the VA called for special relief for affected Michigan borrowers. A spokesperson for the Department of Housing and Urban Development said FHA lenders have been seeking guidance on how to handle single-family housing properties with an FHA-insured mortgage that may be affected by the tainted water supply in Genesee County., MI. The FHA’s two-page guidance stated that a property in the affected areas must first meet the agency’s property acceptability standards. Lenders are required to ensure that each property has a continuing adequate supply of clean, safe and potable drinking water. In addition, they must make sure the property is safe to occupy and free of any health or environmental hazard. HUD’s Single Family Policy Handbook ...

The FHA will soon begin implementing system enhancements to the Electronic Appraisal Delivery (EAD) portal to improve its functionality further and to address user feedback. Use of the EAD portal becomes mandatory on June 27, 2016, when appraisers will begin to submit their appraisals electronically to FHA, reducing the time for processing and closing an FHA-insured loan. The FHA will implement the changes on March 14. First, reference to the six-digit alphanumeric “one-time key” used by a mortgagee’s designated EAD administrator to log into the EAD portal will be changed to “appraisal portal one-time key.” References to the key will be revised throughout the EAD portal screens and system-generated messages. The appraisal portal’s one-time key is generated in FHA Connection and is the last step in the initial EAD login process. In addition, users will be given a ...

The FHA’s Home Equity Reverse Mortgage Information Technology (HERMIT) system will shift to a new vendor-operated host data center beginning March 21, 2016. Reverse Market Insight (RMI), a provider of data, analysis and portfolio valuation services for the reverse mortgage industry, has been tapped to manage, maintain and operate HERMIT. Launched in October 2012, HERMIT is an online, web-based automated system that monitors and tracks the FHA’s Home Equity Conversion Mortgage portfolio and automates insurance claim payments. HERMIT will shut down temporarily from 7 p.m., March 16, to 8 a.m., March 21, in order to complete the transition. The FHA said there would be no changes to the system’s functionality during transition to the host data center. User IDs and passwords for accessing HERMIT will remain unchanged. Following HERMIT’s transition to the ...

The FHA in 2015 posted significant shares overall among insured loans, except in purchase mortgages where private mortgage insurance enjoyed a slight edge over government-insured products, according to an Inside FHA/VA Lending analysis of agency loan-level mortgage-backed securities. The FHA accounted for the bulk of insured loans in mortgage-backed securities issued last year, writing coverage on an estimated $236.3 billion in mortgage originations, or 38.8 percent of all insured mortgage loans in 2015. Approximately $608.8 billion in securitized mortgages received...[Includes one data table]

The FHA Mutual Mortgage Insurance Fund is projected to generate $9.1 billion in profits in FY 2017 but officials say they will not be reducing mortgage insurance premiums any time soon. Released this week, the White House’s proposed budget projects FHA will insure $204 billion in new forward, single-family mortgages with a negative credit subsidy of 4.42 percent for each loan, resulting in a projected profit of $9.1 billion. In fiscal 2016, the program is expected to generate $7.7 billion in profits. Separately, for the Home Equity Conversion Mortgage program, the proposed budget is projecting $18.5 billion in new reverse mortgage loans with a negative credit rate of 0.33 percent, netting $61 million in profits. During a budget briefing, Housing and Urban Development Secretary Julian Castro said there are no plans to change the current mortgage insurance premium. “We want to ensure our ...