Department of Housing and Urban Development program staff and the agency’s inspector general are reportedly at loggerheads over an IG recommendation to deny FHA insurance to loans that receive downpayment assistance from programs funded through premium-pricing mechanisms. Responding to critics, the HUD OIG is standing by its audit findings, which could force the HUD deputy secretary to intervene in order to resolve the issues raised by the audit report and restore lender confidence. The report’s recommendation has alarmed lenders that participate in downpayment assistance “gift” programs run by housing finance agencies (HFAs). This prompted Ed Golding, HUD’s principal deputy assistant secretary for housing and head of the FHA, to issue a clarification of the FHA’s position on the issue. Golding’s note reaffirmed FHA’s support for certain downpayment assistance programs (DAPs), “like those run by ...

The Department of Housing and Urban Development’s proposal to remove a key disclosure in a standard HUD/VA form that comes with a residential mortgage closing document is getting flak from the mortgage industry and from some members of Congress. Leading Democrats on the Senate Banking and House Financial Services committees are pushing HUD to reconsider the proposal. They fear the proposed change would make it easier for lenders that have engaged in criminal behavior to re-enter the FHA and VA markets and continue their illegal lending practices. Among other things, HUD’s proposal would eliminate the requirement that FHA lenders certify on each loan application that they are not, or have not recently been, subject to certain charges or penalties. In their letter, Senators Sherrod Brown, D-OH, and Elizabeth Warren, D-MA, and Rep. Maxine Waters, D-CA, urged HUD to ...

A multi-million dollar false claim lawsuit filed by the Department of Justice against Wells Fargo in 2012 appears headed to trial unless both sides agree to renegotiate a settlement. Brought under the federal False Claims Act, the lawsuit has moved on to the discovery phase of the litigation following a failed attempt by the parties to reach a settlement. The DOJ has wielded the FCA effectively in the past couple of years in efforts to recover losses from lenders that allegedly committed loan fraud against the FHA. A string of FCA lawsuits against FHA lenders has resulted in approximately $4.5 billion in recoveries for the government. The 2012 lawsuit alleged that Wells Fargo misled the FHA as to the quality of underwriting on 6,320 FHA-insured loans, which later caused approximately $190 million in losses to the agency’s mortgage insurance fund. Wells Fargo has denied the allegations and maintains that, as a ...

The Federal Home Loan Bank Mortgage Partnership Finance program has announced its first security issuance with a Ginnie Mae guarantee. The $5 million security is backed by home loans originated by community banks and credit unions through the MPF Government MBS product. The Mortgage Bankers Association welcomed the new MBS, seeing it as another opportunity for all lenders to access the capital markets directly, reducing costs and increasing originations. “Many community banks use the FHLB MPF program to sell conventional mortgages into the secondary market,” observed Ron Haynie, senior vice president at the Independent Community Bankers of America. “This expansion in aggregating and securitizing government loans provides community banks with the opportunity to reach more borrowers, especially in rural and small-town markets, and to safely sell those loans to ...

The Federal Home Loan Bank’s Mortgage Partnership Finance (MPF) Program has removed certain barriers to streamline refinancing of government-backed mortgages. Effective on July 6, 2015, the MPF no longer requires minimum FICO score, maximum loan-to-value ratios or appraisals for FHA streamlined refis, VA Interest Rate Reduction Refinance loans and rural housing home loans with a U.S. Department of Agriculture guarantee. The MPF program’s participating financial institutions (PFIs) may now originate and underwrite streamline refis based solely on the requirements of the FHA, VA or the USDA’s Rural Housing Service. The program currently requires borrower and co-borrower income for government loan streamline refis for the purpose of loan presentment. “Presentment” refers to the right to require a lender to demand payment of amounts ...

Ginnie Mae issuance of government-insured mortgage-backed securities rose a whopping 47.3 percent in the second quarter of 2015 from the previous quarter, powered by a robust FHA refinancing volume, according to an Inside FHA/VA Lending analysis of agency data. Government-backed Ginnie MBS production in the second quarter totaled $117.5 billion, up from $79.8 billion in the prior quarter. Volume year-to-date also increased by 57.7 percent from the first six months of last year. From May to June, government-backed securitization increased a modest 2.9 percent. FHA loans comprised 62.6 percent of Ginnie MBS issuance in the second quarter while VA accounted for 33.7 percent. Securitized loans with a Rural Housing Service guaranty represented 3.6 percent of total Ginnie MBS issuance during the period. FHA loan securitization was robust in the second quarter, as volume ... [ Charts ]

Rising home values could present a new opportunity for FHA borrowers to refinance into a conventional loan and enable those borrowers who choose to stay with FHA financing to take advantage of FHA’s reduced annual mortgage insurance premium, according to lenders. With house prices on the rise, FHA borrowers are seeing a build-up in equity. This might be a good time for them to remove that monthly payment and get out of their FHA loan, said Faramaz Moeen-Ziai, vice president of national sales and production at Commerce Home Mortgage in Huntington, CA. With an FHA-insured loan, coverage is for the life of the loan while private mortgage insurance on a conventional is cancellable when paid down to 79 percent of the loan amount. This might be especially beneficial to homeowners living in homes valued far less than what they owe on the property, or to holders of ...

Industry experts are sharply divided on whether the FHA’s financial condition is actually getting better or worse. Potomac Partners, a business consultancy group, is optimistic that the FHA’s Mutual Mortgage Insurance Fund has finally turned a corner with great signs of improvement in the first quarter of 2015. Changes and adjustments made by the Department of Housing and Urban Development since last year have placed the MMI Fund on a positive trajectory to reach its required 2.0 percent capital ratio in 2016. Last year, the fund’s capital ratio improved from a negative 0.11 percent to a positive 0.41 percent and its economic value appears to be improving. Potomac Partners’ analysis looked at FHA risk, loan performance, delinquency rates, debt-to-income ratios, loan-to-value ratios, originations and claims, loss rates as well the effect of the ...

Overview Conference Call for Mortgagees, Servicers and Other Interested Parties. The FHA will host an industry briefing session on July 16, 2015, 2 p.m.-3 p.m., to provide an overview of the Servicing and Loss Mitigation Section of the Single-Family Policy Handbook, as outlined in the Highlights of Changes and Clarifications document. The conference call’s dial-in number is (800) 700-7784. The participant access code is 364218. USDA Performs System Maintenance. The U.S. Department of Agriculture’s mortgage guaranty system will not be functioning at full capacity from July 10-13 due to routine maintenance. Maintenance work is scheduled to begin at 2 p.m., July 10, CDT. The Guaranteed Underwriting System will be operating at a reduced level. Lenders will not be able to make final submissions or upload documents for the entire work period. In addition, the ...

Residential MBS production continued to gain speed in the second quarter of 2015 while non-mortgage securitization remained strong, according to a new Inside MBS & ABS analysis. A total of $419.42 billion of single-family MBS and non-mortgage ABS were issued during the second quarter, an increase of 21.2 percent from the first three months of the year. It was the strongest new issuance total since the third quarter of 2013 and marked the fifth straight quarterly increase since the market hit a cyclical low at the beginning of last year. Most of the gain came from the agency MBS sector, which totaled $352.73 billion in new issuance, a gain of 29.7 percent from the first quarter. All three agencies posted hefty gains, with the biggest coming at Ginnie Mae, where new issuance jumped 46.7 percent to hit $120.36 billion. A lot of Ginnie’s growth is coming from an unusual surge of refinance activity, which accounted for ... [ charts]